Aramco smashes market record with $100bn orders for new bonds

Aramco will raise $12 billion from the bond sale. (Reuters)
Updated 11 April 2019
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Aramco smashes market record with $100bn orders for new bonds

  • Saudi state oil company will raise $12 billion from debt issue
  • The appetite for Aramco debt was stimulated by a series of “road shows” by the company’s executives and their advisers in the main global financial centers

DUBAI: The Saudi state oil company’s debut on Wednesday on the international capital markets is set to break all records for a bond issue by an emerging market entity.

The Saudi Aramco bond issue attracted more than $100 billion in orders from global investors, the largest ever for emerging market bonds, company sources said on Tuesday.

That easily surpasses the $52 billion for Qatar’s $12 billion deal last year, $67 billion for Saudi Arabia’s own sovereign debt issue in 2016 and $69 billion orders for Argentina’s $16.5 billion trade the same year. 

Aramco will raise $12 billion from the bond sale, split into maturities ranging from three to 30 years. Even before they go on sale, the new bonds were trading up in the “gray market.” “Strong demand in a world looking for extra yield, a new name, and lots of cash,” said Andrew Brenner, managing director of National Alliance Capital Markets.

The appetite for Aramco debt was stimulated by a series of “road shows” by the company’s executives and their advisers in the main global financial centers, and follows publication of the first-ever prospectus to give hard details of the company’s finances and ownership structure.

It will also quieten suggestions that the global financial community had cooled on Saudi Arabia as an investment destination since the murder last year of journalist Jamal Khashoggi.

Khalid Al-Falih, the Kingdom’s energy minister and chairman of Aramco, told a gathering in Riyadh this week that the historic bond would be the beginning of a “permanent presence in capital markets, in bonds, shares and
paper.”

Demand for the bond of more than $100 billion is equal to the amount Aramco expects to raise through international equity markets in an initial public offering on stock exchanges, which has been postponed until 2021.


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

Updated 9 min 9 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.