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.


India suspends Kashmir border trade with Pakistan

Updated 19 April 2019
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India suspends Kashmir border trade with Pakistan

  • Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries
  • India said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency”

NEW DELHI: India has suspended trade across its disputed Kashmir border with Pakistan, alleging that weapons and drugs are being smuggled across the route, as tensions simmer between the nuclear-armed neighbors.
Kashmir has been on edge since a February suicide attack that killed 40 Indian paramilitaries and brought the two countries to the brink of war with cross-border air strikes.
On Thursday, India’s government, which is in the middle of a tough national election, said it had reports that trade on the border was being “misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.”
It also said many of those trading across the Line of Control, which divides Kashmir into zones under Indian and Pakistani control, had links to militant organizations.
The home ministry said trade would be suspended until a stricter inspection mechanism is in place.
The cross-border trade is based on a barter system, with traders exchanging goods including chillies, cumin, mango and dried fruit.
It began in 2008 as a way to improve strained relations between New Delhi and Islamabad, who have fought two of their three wars over the disputed region.
The Indian Express newspaper said Friday that 35 trucks carrying fruit traveling from the Indian side of the border had been stopped after the government order.
Trade on the border has been suspended before, including in 2015, when India accused a Pakistani driver of drug trafficking.
The latest move comes after India withdrew “Most Favoured Nation Status” — covering trade links — from Pakistan after the February attack, which was claimed by the Pakistan-based Jaish-e-Mohammed Islamist group.
Islamabad has denied any involvement in the attack.
India’s Hindu nationalist Prime Minister Narendra Modi has made national security a key plank of his re-election campaign, pointing to the recent flare-up of violence as he battles the center-left opposition Congress party.
He is seeking a second term from the country’s 900 million voters in the mammoth election which kicked off on April 11 and runs till May 19. The results will be out on May 23.