Saudi Aramco Taps International Bond Market with $100 Billion Bond Deal

A number of international investors are eyeing Saudi’s most profitable state-owned oil company, Aramco, with its recent announcement of opening up the bond market for retail investors.

This news is apart from last month’s $12 billion bonds sold in the market by Aramco.

For some experts, this isn’t entirely good because there is a reason behind this move.

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Last week, the officials said that they will sell bonds in chunks, about SR 1,000 or $267. This is based on the decision of Minister Mohammed al-Jadaan to make it easier for investors to participate in the company’s bond market.

Jadaan said, “Redemption becomes very difficult if you are trading in millions. So, by making it 1,000 riyals, it becomes a lot easier for the financial industry to create new products.

Meanwhile, according to an article published by Forbes, the purpose of the Aramco bond sale is due to the move to extract cash from the company and put it into the ruling Crown Prince pet projects. This is according to the recent report of the financial firm TS Lombard.

For years, the kingdom is already creating ways to spread out the economy and not rely on oil alone. In order to reform the economy, cash is needed, which can be accessible from Aramco, which explains the massive bond sale last month.

It can also be remembered that Mohammed created the Vision 2030 project, which helps the government modernize capital markets to drive bigger investments in the kingdom.

“We have been very known for exporting oil and capital—it is time to retain the capital here and create more diversity for people to participate, to invest and also to save,” said Head of the Debt Management Office Fahad al-Saif.

Aramco is the world’s biggest state-owned petrochemical company that has a value of about $1.2 trillion.