Mohamed Khaled El-Khenifar, a banker specializing in debt and credit markets, added: Paying a large portion of the deal in cash is a wise step, which will lead to a reduction in financing costs (i.e. interest on loans and debts). ) To record levels compared to if Aramco decided to pay it back through loans and bonds.
This means that the size of bonds and loans will not be as large as initially expected, according to the investor’s presentation, Aramco will pay 50% of the acquisition value when The SABIC acquisition is closed in 2020 (which requires regulatory approvals), and the remainder of the amount will be in installments. Noting that at the end of 2018, cash and cash equivalents amounted to $ 48.8 billion.
He pointed out that the timing of the issue is more than ideal given that I have not seen the cost of financing with such a decrease compared to the previous 15 months.
Al-Khunaifar explained that the promotional round includes 8 global capitals, due to the fact that the company has multiple geographical activities around the world, and that the investors there are familiar with Aramco's activities in their countries. ; Which helps maximize your underwriting coverage later.
He continued: Therefore, we see that it is justified that the period between the promotional round and the final pricing is longer than usual given that investors will require more time to review the financial statements. Performance of the company in the past three years.
Al-Khunaifir pointed out that the issuance coincides with the accession of Saudi Arabia to the JPMorgan bond index for emerging markets, and this was reflected in the increased demand for Saudi debt in the secondary markets, and this matter It will lead to a reduction in borrowing costs for the Kingdom and its government companies.
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