Saudi Aramco bond issue attracts ‘north of $30bn’

Saudi Aramco’s Shaybah Natural Gas Liquids project, Saudi Arabia. Saudi Aramco’s bond issue has attracted higher-than-expected interest from investors. (Reuters)
Updated 11 April 2019
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Saudi Aramco bond issue attracts ‘north of $30bn’

  • Aramco’s first foray into international debt markets had previously been expected to raise around $10 billion
  • Increased global investor appetite for the issue would reassure Aramco and the Kingdom that its appeal in international markets remained as strong as ever

RIYADH: Saudi Aramco’s crucial bond issue, set to close on Wednesday, has already attracted higher-than-expected interest from international investors, the Kingdom’s energy minister, Khalid Al-Falih, has revealed.
Speaking on Monday at the inaugural Saudi Energy Forum in Riyadh, organized by information consultancy Gulf Intelligence, Al-Falih said that the issue attracted demand “north of $30 billion.”
The minister, however, declined to give details of the final amount to be raised or the pricing.
“It is at a very critical stage, but according to all the press reports and the analysts, investors have been extremely impressed,” Al-Falih said.
Aramco’s first foray into international debt markets had previously been expected to raise around $10 billion, to be put toward the cost of acquiring the Saudi industrial conglomerate SABIC, valued at nearly $70 billion. But increased global investor appetite for the issue would reassure Aramco and the Kingdom that its appeal in international markets remained as strong as ever.
It would also encourage Aramco to go back to the bond markets at a later date. Al-Falih said that Aramco was “seeking a permanent presence in capital markets.”
In a wide-ranging interview with Bloomberg TV, broadcast live at the forum, Al-Falih spoke of the changes taking place in the economy of Saudi Arabia as a result of the Vision 2030 reform plan, the acquisition of SABIC, and future investment policy in the Kingdom.
“It is a phenomenal transformation, and SABIC is the ideal way to do it. Just a short while ago our acquisition of SABIC would have been unthinkable, because it was seen as a national champion,” he said.
Asked whether the proceeds of the SABIC transaction would “re-energize” the investment strategy of the Saudi Public Investment Fund (the vendor of SABIC’s shares and on whose board Al-Falih sits), he said: “The vision of PIF goes way beyond $69 billion from Aramco.”
He hinted that PIF might divest other “non-strategic assets” in the future to focus on its hi-tech international stakes such as Uber,
Lucent and Tesla. “As bold as they were in entering these assets, they may also be bold to exit others.”
Al-Falih later said that the electric vehicles industry needed to be a significant element of the recently announced National Industrial Development and Logistics Plan.
With regard to the oil market, Al-Falih said that the forthcoming meeting of the Joint Ministerial and Monitoring Committee (the framework for OPEC co-operation with non-OPEC producers) would be a “key decision point” on whether or not to implement further cuts in oil output.
“I don’t think we will need (to do more) ... the market is on its way toward balance. We have done a lot more than others,” he said, referring to speculation that some producers have not adhered to previously agreed levels.
The minister added that personal relations between himself and his Russian counterpart Alexander Novak were “great”, but he added: “The dynamics in Russia are different from other countries.”


Saudi-backed SoftBank invests $125 million in Alphabet venture to put cellphone antennas in the sky

Updated 12 min 35 sec ago
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Saudi-backed SoftBank invests $125 million in Alphabet venture to put cellphone antennas in the sky

  • SoftBank’s year-old HAPSMobile and Alphabet’s Loon separately have been trying to fly networking equipment at high altitudes
  • The goal is to provide high-speed Internet where ground-based towers are unreachable

SAN FRANCISCO, USA: A SoftBank Corp. business seeking to find a way to fly cellphone antennas high in the atmosphere to provide internet in underserved areas said on Wednesday it was investing $125 million in an Alphabet Inc spinoff working on the same problem.

SoftBank’s year-old HAPSMobile and Alphabet’s Loon, which spun out last July from the research incubator of the Google parent, separately have been trying to fly networking equipment at high altitudes to provide high-speed Internet where ground-based towers are unreachable.
Loon carries the gear with a large balloon, while HAPSMobile uses a large drone.
Despite Internet coverage gaps in rural areas or during natural disasters, mobile network operators, governments and other potential customers have yet to demonstrate much enthusiasm for buying skyborne technologies.
Also in the competition to fill the coverage gaps are several billionaire entrepreneurs, including Elon Musk, Richard Branson and Jeff Bezos. Each is backing separate early-stage ventures that want to beam Internet from satellites in near-Earth orbit.
Loon and HAPSMobile said on Wednesday that collaboration could be the key to adoption. They are discussing the possibility of using each others’ technology, standardizing their airborne and ground networking gear and joining forces in regulatory discussions, they said in a statement.
The companies described their partnership as a “long-term” tie-up of one of Japan’s top three wireless carriers and one of the world’s biggest tech companies.
“I’m confident we can accelerate the path toward the realization of utilizing the stratosphere for global networks by pooling our technologies, insights and experience,” Junichi Miyakawa, SoftBank’s chief technology officer and HAPSMobile’s chief executive, said in the statement.
“Even in this current era of coming 5G services, we cannot ignore the reality that roughly half of the world’s population is without Internet access,” Miyakawa added.
Loon has tested balloons for nearly a decade and expects to hold its first commercial trial in Kenya this year.
HAPSMobile emerged from technology developed by dronemaker AeroVironment Inc, which owns 10 percent of the SoftBank subsidiary.
Loon said it has the option to later invest $125 million in HAPSMobile.