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Aramco Bond Market Demand Expected to Triple by 2026
Amid remarkable demand, Aramco — the world's largest oil producer — reached a significant milestone as investor demand for its bonds exceeded the planned $10 billion issuance by nearly 3 times. This marks the first time the Saudi oil giant has entered the global bond market.
Saudi Energy Minister Khalid Al-Falih said: "The demand for Saudi Aramco's first international bonds, seen as a gauge of potential investor interest in the company's planned IPO, exceeds $30 billion." Speaking at the first Saudi Energy Forum, Al-Falih added that "the deal will close the day after tomorrow," and that he believes "the demand for bonds is north of thirty billion dollars."
Aramco held meetings with investors last week in a global bond roadshow ahead of the issuance. The process is expected to attract demand from all emerging market investors and investment-grade bond buyers, as Aramco's position as the world's largest oil company puts its bonds on par with major independent global oil companies such as ExxonMobil and Shell.
Aramco appointed Lazard as financial advisor for the bond deal, and JP Morgan and Morgan Stanley as global coordinators and bookrunners, alongside Citigroup, Goldman Sachs, HSBC, and NCB Capital.
Commenting on this, Dr. Saeed Al-Sheikh, a member of the Saudi Shura Council, said: "This rise in demand for international bonds issued by Saudi Aramco was expected, as Aramco is the largest oil company in the world. International investors' view and evaluation of its issuances is no different from their view of large international companies like Exxon and Shell. The Saudi company's credit rating record by international agencies has always been at high investment grades."
Muhyiddin Quranful, Investment Manager in Global Sukuk and Fixed Income for the Middle East and North Africa at Franklin Templeton Investments, commented: "The Aramco issuance is considered successful by all measures, after witnessing significant investor demand." He confirmed that the issuance marks a good introduction for the Saudi oil giant to global debt markets, and came at an ideal time. He noted that "the offering continues to see demand even after the Saudi Energy Minister's statements, with coverage now reaching four times, and higher coverage ratios are expected as the subscription process continues until next Wednesday."
He predicted that future Aramco debt issuances will see the same strong demand as the current bonds, and that their success is one of the strong indicators for Aramco's anticipated IPO.
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