Saudi Aramco saw on Monday a strong demand in the first hours after the company offered indicative pricing for four-tranche dollar-denominated bonds, with combined order books for its 3-year, 5-year, 10-year, and 30-year bonds exceeding $10.5 billion, according to fixed income news service IFR.
According to a document leaked from the Initial Public Offering (IPO), Aramco has developed a competitive primary profit margin reflecting its high creditworthiness.
The Saudi oil giant’s three-year debt has been initially priced at around 100 basis points over US Treasuries, while the five-year tranche is set at approximately 115 basis points over the benchmark.
For longer-term debt, the 10-year bonds were initially priced at around 125 basis points over US Treasuries, and the 30-year bonds at around 165 basis points over the same benchmark, respectively, the document showed.
The order book offering, which was quickly covered topping $10.5 billion before the markets closed on Monday, reflects institutional investors’ confidence in the financial strategy of the world’s largest oil company.
The offering comes at a time when investors are looking for stable returns and heaven assets amid volatile geopolitical markets.
These price margins are expected to narrow in the coming hours as the flow of orders continues, until a final pricing that will determine the total value of the bond issue.
