Just a day after the Saudis allegedly threatened the hegemon of the almighty petrodollar, Saudi Aramco began the sale of its first-ever dollar bonds with an order-book of around $40 billion.
“It will be definitely a jumbo deal with at least four tranches,” said Sergey Dergachev senior portfolio manager at Union Investment Privatfonds GmbH in Frankfurt. “Demand should be huge.”
Demand for the most highly anticipated sale of the year already totaled $30 billion, Aramco Chairman and Saudi Energy Minister Khalid Al-Falih told Bloomberg TV early on Monday, but it has already rep[ortedly surpassed that.
Dergachev speculated that demand could even surpass the record $53 billion in bids that Qatar received for its $12 billion bond sale last year.
Entering the bond market has forced Aramco to open its books after decades of speculation about its earnings and production. The company got the fifth-highest investment-grade ratings at both Moody’s Investors Service and Fitch Ratings, matching Saudi Arabia’s sovereign grade.
Bloomberg reports that the oil giant is offering six-tranche debt, according to the people familiar with the matter, who asked not to be identified. The world’s most profitable company is tapping the market ahead of a planned $69 billion acquisition.
Initial Price Thoughts:
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USD 3Y Fixed — T+75 area
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USD 3Y Floating Rate Notes — Libor + equivalent
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USD 5Y Fixed — T+95 area
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USD 10Y Fixed — T+125 area
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USD 20Y Fixed — T+160 area
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USD 30Y Fixed — T+175 area
Aramco may raise about $10 billion from the sale, the kingdom’s energy minister said in January, as Saudi Arabia combines the oil producer with chemical maker Saudi Basic Industries Corp.
The deal is expected to price tomorrow, so we would not be surprised to see leakage higher in Treasury yields on rate-locks and rotation.
via ZeroHedge News http://bit.ly/2uRQq8f Tyler Durden