Aramco Hype Meets Reality as Bonds Drop After Unprecedented Sale - Bloomberg:
The slump in Aramco bonds since its unprecedented debt sale this month makes one thing clear: you can’t take the Saudi out of Saudi Aramco.
Demand was so great, with bids topping $100 billion, that the energy giant managed to raise $12 billion at lower yields than the kingdom itself, which is uncommon in corporate bond markets. Investors are now paying the price for that discrepancy: all five maturities have fallen since trading started last week, in some cases by more than 2 cents on the dollar.
“We view the company as more of a Saudi risk rather than just an energy company,” said Patrick Wacker, a fund manager at Singapore-based UOB Asset Management Ltd. who dumped his holdings on the first day of trading to profit from the initial euphoria. He predicts the debt will keep falling until it trades at a yield premium to the Saudi government.
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