We have recently heard of the Saudi government considering an initial public offering for its ARAMCO. This set off speculation about the world’s first trillion-dollar-plus company which indeed is more than 10 times Exxon-Mobil’s size in that it pumps over one-tenth of the world’s crude. Now, Saudi is planning a $10 billion bond issuance. Indeed with the fall of prices of oil, the kingdom’s budget got evidently restricted to not known before ‘small times’, despite the recent and flashy rise in the price of a barrel.
This story from The Irish Times illustrates well the Saudi’s frivolity with respect to their diminishing petro-dollar earnings. The Photograph above is of : Karen Bleier/AFP/Getty Images.
Saudi Arabia plans $10bn bond issue
Country is seeking funds to shore up public finances that have been hit by the drop in oil prices to about half their 2014 levels
Oil rose to the highest in more than a year on Monday after Saudi Arabia expressed optimism that OPEC would work out a deal and Russia voiced its support.
Saudi Arabia, the biggest oil exporter, sees its crude reserves of 266.5 billion barrels lasting 70 more years and hasn’t sought an independent consultant to review the figures, according to a bond prospectus.
The nation’s wealth is based mainly on oil, with crude sales accounting for 75 percent of total export earnings, according to the prospectus.
Saudi Arabia plans to sell at least $10 billion (€9.05 billion) in bonds maturing in five, 10 and 30 years, and it disclosed plans to hold investor meetings in London, Los Angeles, Boston and New York starting on Wednesday.
The country is seeking funds to shore up public finances that have been hit by the drop in oil prices to about half their 2014 levels.
At the same time, the kingdom plans to wean itself off dependence on oil for state revenue by selling part of its state oil company to help develop industries including auto manufacturing and technology.
Oil slipped from a 15-month high in New York yesterday amid uncertainty over whether Russia would join an OPEC deal to curb supply. Crude fell as much as 1.9 per cent.
Russia’s biggest producer Rosneft said it won’t cut output, according to Reuters, after president Vladimir Putin said at a conference in Istanbul his country is willing to join efforts by Opec to stabilise the market through a production freeze or cut.
Price declines accelerated as the dollar climbed, curbing the appeal of commodities. Oil rose to the highest in more than a year on Monday..
Brent for December settlement dropped 96 cents, or 1.8 per cent, to $52.18 a barrel on the London-based ICE Futures Europe exchange.