Saudi Aramco returned to the debt markets for the first time since April of last year, selling $8 billion of bonds to help fund the world’s biggest dividend.
The state oil and gas firm issued the debt on Tuesday after slumping crude prices caused profit to fall by 45% in the third quarter. That’s left it unable to generate enough cash to fund shareholder payouts it’s promised will reach $75 billion this year. Almost all of those will go to the Saudi Arabian government, which needs the money to plug a widening budget deficit and prop up a slumping economy.
Aramco’s deal was the largest from a company in emerging markets this year, according to data compiled by Bloomberg. The firm sold tranches maturing in three, five, 10, 30 and 50 years. Investors placed more than $50 billion of orders, according to people with knowledge of the matter. Pricing ranged from 1.32% for the shortest notes to 3.65% for the 50-year portion. The spreads over U.S. Treasures were between 110 basis points and roughly 200.
Benchmark Brent oil has dropped almost 35% this year to around $44 a barrel, with the coronavirus pandemic and lockdowns sapping demand for energy. Still, yields in the developed world are so low that investors have rushed to buy highly-rated emerging-market assets, including those of Aramco, the world’s biggest oil company. The yield on the firm’s $3 billion of bonds due in 2029 has dropped to 2.11% from 3.04% at the start of 2020. That’s only slightly higher than the rates on the Saudi government’s equivalent bonds.
No comments:
Post a Comment