RIYADH: Saudi Aramco has received bids for more than three times the $10 billion it was expected to raise in a debut international bond issue, which is being watched as a gauge of potential investor interest in the oil company’s eventual initial public offering.

The demand prompted the world’s largest oil firm to market the six-part deal – which will price on Tuesday and could see Aramco raise more than $10bn – with a smaller than expected premium to the Saudi government that owns it.

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People familiar with the matter told Reuters that Aramco’s vast profits – nearly three times those of Apple last year - meant investors were willing to buy the bonds even if they end up getting a lower return than on Saudi sovereign debt.

Aramco last year postponed until 2021 an initial public offering (IPO) aimed at raising money for a government looking to cut its budget deficit and diversify its economy beyond oil.

“The success of this bond issue will be the litmus test and a crucial precursor for the anticipated Aramco IPO within the next two years,” said Salah Shamma, head of investment, MENA equities, at Franklin Templeton.

Speaking at an event in Riyadh, Saudi Energy Minister Khalid al-Falih said he believed demand for the issue was “north of” $30bn.

Aramco met investors last week in a global roadshow ahead of the issue. The bonds, which range in maturity from three to 30 years, are expected to attract demand from both emerging markets and investment-grade buyers.

Published in Dawn, April 9th, 2019