Dubai: The much talked about $10 billion dollar bond issue of Saudi Aramco, the world’s biggest oil producer, is here.

The company started with its investor meeting from April 1 and would continue for the week, the company said on a day when they announced $111.1 billion in profit last year, which is equivalent of net profits of Apple and Alphabet combined.

Analysts said the demand is likely to be robust. The proceeds would be used to fund a part of the $69 billion acquisition of Saudi Basic Industries.

“Saudi Aramco bond is likely to be multi-times oversubscribed in view of a strong credit quality, sector diversification that it offers, and scarcity of Aramco bonds in the market,” Anita Yadav, head of fixed income research, senior director, wholesale banking, Emirates NBD told Gulf News.

Saudi Aramco has been rated ‘A1’ long-term issuer rating with a stable outlook, three notches below the AAA rating for Saudi sovereign. “Saudi Aramco has many characteristics of a AAA-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world’s largest hydrocarbon reserves. These features position it favourably against the strongest oil and gas companies that Moody’s rates,” said Rehan Akbar, a Vice President — Senior Credit Officer at Moody’s.

This lower rating for the company would reflect on the pricing. “Aramco would be priced 0-20 basis points wider in terms credit spread than the government,” she added. The bonds will be listed on the London Stock Exchange. JP Morgan, Morgan Stanley, HSBC, Citi, Goldman Sachs and National Commercial Bank were the lead arrangers for the issue.

Robust pipeline:

Emirates NBD’s Yadav expects the pipeline of future bond issues to remain strong. She expects bonds worth $70-90 billion to be issued in 2019 compared to $78 billion last year. “Higher rated names such Aramco would benefit the emerging market index’s overall credit quality,” Yadav said.

GCC has been a profilic issuer of bonds in the past few years as governments sought to bridge a gap left by higher government expenses and lower erevnues.

“Total issuances would go up because the budget deficits would be higher as average oil prices would be lower than what it was last year. On top there would be an extra issuance to fund those mergers and acquisitions,” Yadav said. Saudi Arabia has projected to issue 118 billion Saudi riyals in 2019.