Saudi Aramco's $10bn bond sale will close on Wednesday

Investor demand is over $30bn, and the bond sale will help Aramco finance its SABIC acquisition

Aramco, Saudi Aramco, Khalid al-Falih, SABIC, PIF, Public Investment Fund

Saudi Aramco will close its $10bn bond sale on Wednesday, Saudi Energy Minister Khalid Al-Falih told an energy conference in Riyadh, AFP reports.

The bond sale will help Saudi Aramco, recently revealed to be the world's most profitable company with $111bn net profit in 2018,  finance its acquisition of the Public Investment Fund's (PIF) 70% stake in Saudi chemicals giant SABIC.

"The bond issue is at a very critical stage. The roadshow is ongoing (and) the deal will close on Wednesday," Falih reportedly said.

“As the world’s most profitable company, it can be argued that Aramco does not need to resort to debt offering and that the bond serves a secondary purpose to inspire confidence and offer new transparency into Aramco’s finances, as the company fires up its global expansion strategy," said Anna Belova, senior oil and gas analyst at GlobalData.

The company's plans to grow its downstream portfolio echo a common strategy among oil majors to become more resilient in low oil price and low-carbon environments. It also adds more liquidity to the PIF, the main vehicle for economic diversification in KSA, which aimed to make $100bn from shelved plans for an Aramco IPO.

"Oil majors are more advanced in their efforts to further vertical integration, but national oil companies are catching up," Fitch Ratings wrote in a comment on the SABIC acquisition.

Al-Falih has noted that he still hopes for an Aramco initial public offering to take place in 2021. He has emphasised Saudi Arabia's role as a 'stabilising force of energy markets,' most recently in the face of rumors that the nation was planning to ditch the US currency for its oil trades, which Al-Falih called "innacurate".

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