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Aramco Registers Record Number of Orders on First Int’l Bond

General view of Aramco tanks and oil pipe at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (Reuters)
General view of Aramco tanks and oil pipe at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (Reuters)
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Aramco Registers Record Number of Orders on First Int’l Bond

General view of Aramco tanks and oil pipe at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (Reuters)
General view of Aramco tanks and oil pipe at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (Reuters)

Saudi Aramco is set to raise $12 billion with its first international bond issue after receiving more than $100 billion in orders, a record breaking vote of market confidence for the oil giant, reported Reuters.

Demand for the issue comprising several bond maturities totalled $92 billion, a source close to the operation told AFP, making it nearly 6.7 times oversubscribed.

Before the bond deal was marketed on Monday, Saudi Energy Minister Khalid al-Falih said initial indications of interest for the paper were over $30 billion.

Having swelled to over $100 billion during the sale process, demand appeared to be the largest ever for emerging markets bonds, fund managers said.

“Purely on figures, it is a fantastic credit,” said Damien Buchet, CIO of the EM Total Return Strategy, Finisterre Capital.

The issue has attracted interest from a wide range of investors, as the oil producer’s vast profits would put its debt rating - if unconstrained by its sovereign links - in the same league as independent oil majors like Exxon Mobil and Shell.

The firm announced last month it was buying a 70-percent stake in SABIC from Saudi Arabia's main sovereign wealth fund, the Public Investment Fund (PIF), for $69.1 billion.

Aramco made $111 billion in net profit last year, making it the most profitable company in the world.

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Inflation Rose to 2.3% in Europe. That Won't Stop the Central Bank from Cutting Interest Rates

A view shows the Bercy Economy and Finance Ministry as a metro operated by the Paris transport network RATP passes over the Pont de Bercy bridge in Paris, France, November 28, 2024. REUTERS/Stephanie Lecocq
A view shows the Bercy Economy and Finance Ministry as a metro operated by the Paris transport network RATP passes over the Pont de Bercy bridge in Paris, France, November 28, 2024. REUTERS/Stephanie Lecocq
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Inflation Rose to 2.3% in Europe. That Won't Stop the Central Bank from Cutting Interest Rates

A view shows the Bercy Economy and Finance Ministry as a metro operated by the Paris transport network RATP passes over the Pont de Bercy bridge in Paris, France, November 28, 2024. REUTERS/Stephanie Lecocq
A view shows the Bercy Economy and Finance Ministry as a metro operated by the Paris transport network RATP passes over the Pont de Bercy bridge in Paris, France, November 28, 2024. REUTERS/Stephanie Lecocq

Inflation in the 20 countries that use the euro currency rose in November — but that likely won’t stop the European Central Bank from cutting interest rates as the prospect of new US tariffs from the incoming Trump administration adds to the gloom over weak growth.
The European Union’s harmonized index of consumer prices stood up 2.3% in the year to November, up from 2.0% in October, the EU statistics agency Eurostat reported Friday.
Energy prices fell 1.9% from a year ago, but that was offset by price increases of 3.9% in the services sector, a broad category including haircuts, medical treatment, hotels and restaurants, and sports and entertainment, The Associated Press reported.
Inflation has come down a long way from the peak of 10.6% in October 2022 as the ECB quickly raised rates to cool off price rises. It then started cutting them in June as worries about growth came into sharper focus.
High central bank benchmark rates combat inflation by influencing borrowing costs throughout the economy. Higher rates make buying things on credit — whether a car, a house or a new factory — more expensive and thus reduce demand for goods and take pressure off prices. However, higher rates can also dampen growth.
Growth worries got new emphasis after surveys of purchasing managers compiled by S&P Global showed the eurozone economy was contracting in October. On top of that come concerns about how US trade policy under incoming President Donald Trump, including possible new tariffs, or import taxes on imported goods, might affect Europe’s export-dependent economy. Trump takes office Jan. 20.
The eurozone’s economic output is expected to grow 0.8% for all of this year and 1.3% next year, according to the European Commission’s most recent forecast.
All that has meant the discussion about the Dec. 12 ECB meeting has focused not on whether the Frankfurt-based bank’s rate council will cut rates, but by how much. Market discussion has included the possibility of a larger than usual half-point cut in the benchmark rate, currently 3.25%.
Inflation in Germany, the eurozone’s largest economy, held steady at 2.4%. That “will strengthen opposition against a 50 basis point cut,” said Carsten Brzeski, global chief of macro at ING bank, using financial jargon for a half-percentage-point cut.
The ECB sets interest rate policy for the European Union member countries that have joined the euro currency.