Even $10 Billion Aramco Megabond Can't Fix Gulf-Debt Hunger - Bloomberg

Even $10 Billion Aramco Megabond Can't Fix Gulf-Debt Hunger - Bloomberg:

A $10 billion corporate-bond offering might be hard for investors to digest in some emerging markets. Not so in the Gulf, and not when the notes are being sold by the most profitable company on the planet.

“The appetite for ultra-high investment grade, particularly from the Gulf Cooperation Council where spreads are still wide relative to developed markets, is very strong,” said Patrick Wacker, fund manager for emerging-markets fixed income at UOB Asset Management Ltd. in Singapore. “If Ecuador or Indonesia came with these sizes, that would cause indigestion.”

Though a contender for the highest rating from Moody’s Investors Service, Aramco’s state-owned status means it shares Saudi Arabia’s A1 sovereign credit score, which is five steps below the top grade. The yield on the nation’s 2029 debt is similar to that of lower-ranked Colombia and Panama, which could mean attractive pricing for a company that turned a $111.1 billion profit last year if the bonds are, as expected, placed at a small premium to the sovereign.