Western banks help Saudis raise $12 billion in bonds

FILE - In this Feb. 26, 1997 file photo, Khaled al-Otaiby, an official of the Saudi oil company Aramco, watches progress at a rig at the al-Howta oil field near Howta, Saudi Arabia. According to an assessment published Monday, April 1, 2019, by Moody’s Investors Services, the net profits of Saudi Aramco reached $111 billion last year. That places Aramco ahead of some of the world’s most profitable firms. In their first-ever grade assessment for Aramco, Fitch Ratings issued the firm an A+ rating, while Moody’s gave it it’s A1 rating ahead of its upcoming bonds sale. (AP Photo/John Moore, File)

LONDON — Saud Arabian state-controlled oil company Aramco - the most profitable in the world - has raised $12 billion in a bond issue that shows Western investors are keen to do business with the kingdom despite global outrage over last year's killing of a dissident journalist.

Bonds from Saudi Aramco began trading in London on Wednesday after strong interest from investors, with bids reportedly reaching as much as $100 billion. The Saudis had initially wanted to raise $10 billion but issued $12 billion in the end, according to financial information provider FactSet.

Saudi Arabia faced international condemnation after the assassination in October of Jamal Khashoggi by Saudi agents at the kingdom's consulate in Istanbul. But the bond sale, which was run by banks including JPMorgan and Morgan Stanley, shows continued interest from Western companies.

The money is meant to bring cash to the kingdom's coffers. The proceeds of the bond will help Aramco in its $69 billion acquisition of majority shares in the Saudi petrochemicals firm SABIC from the country's sovereign wealth fund. That money would then be used by the fund as it broadens its investments in an effort to diversify Saudi revenue away from its decades-old reliance on fossil fuels.

The interest in Aramco's bonds marks a PR turnaround for Saudi Arabia. In October, over 100 global executives, including CEOs of major U.S. and European companies, canceled their participation in a Saudi investment forum in the wake of the Khashoggi killing.

The bond issue represents a rare chance to get a piece of Saudi Arabia's state-dominated oil industry — and the huge profits it generates. In filings released before the bond issue, ratings agencies revealed that the company made $111 billion in net income last year.

By contrast, Apple booked a net profit of about $60 billion in its last full year, Royal Dutch Shell had net income of $23 billion and Exxon Mobil $21 billion.

One firm that sat out on the bond sale was Kingdom Holding, the investment company chaired by Prince Alwaleed bin Talal, who was swept up in a wide-reaching anti-corruption campaign in 2017 led by the crown prince as he consolidated power.

Kingdom Holding CEO Talal Al-Maiman said the bond yields were a bit lower than what the firm aims for.

Speaking at a Bloomberg investment conference in Abu Dhabi, Al-Maiman said that the massive international interest in the bond is a positive sign for the kingdom.

"I think this is a success for Saudi Arabia," Al-Maiman said. "It's just a huge vote of confidence."

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Aya Batrawy reported from Abu Dhabi.

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