Aramco to issue US$12b of bonds after unprecedented demand for over US$100b

Aramco is selling the debt in five parts, with the longest maturity, a 30-year bond, to yield 155 basis points over US Treasuries.
Aramco is selling the debt in five parts, with the longest maturity, a 30-year bond, to yield 155 basis points over US Treasuries.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Saudi Aramco is planning to borrow US$12 billion in its debut bond sale as the oil giant pulls off one of the most oversubscribed debt deals of all time.

Investor orders for the dollar bonds reached an excess of US$100 billion at the peak on Tuesday, according to people with knowledge of the matter.

That demand will allow Aramco to pay less for its debt than the Saudi government - a rare development for a state-owned entity, and underscoring the financial strength of the world's most profitable company. It also marks a comeback for Saudi Arabia after the kingdom was shunned by Wall Street and international investors last year following the assassination of journalist Jamal Khashoggi.

Aramco is selling the debt in five parts, with the longest maturity, a 30-year bond, to yield 155 basis points over US Treasuries, the people said, asking not to be identified as the details are private.

The bond sale will raise money to finance the kingdom's economic agenda after an initial public offering of Aramco was postponed last year until at least 2021. Saudi Crown Prince Mohammed bin Salman, who runs the country day-to-day, is using the state oil producer's pristine balance sheet to finance his ambitions for the country's economy.

JPMorgan Chase & Co. and Morgan Stanley are managing the bond sale along with Citigroup Inc, Goldman Sachs Group Inc, HSBC Holdings Plc, and NCB Capital Co.