LONDON – When leaders from Saudi Aramco, the giant oil company in Saudi Arabia, turned prospective investors on the company's first international bond budget last week, they were shown the red carpet everywhere.
In central London, investors entered a room at the exclusive Corinthia Hotel to hear details of the deal. In New York, Jamie Dimon, CEO of JPMorgan Chase, made a rare appearance to speak up for bond sales.
All signs are that investors are eager for something Aramco they can get – despite concerns about how tightly its assets are linked to its owner, the government of Saudi Arabia and the crown prince Mohammed bin Salman.
The tape sales will help finance Aramco's $ 69 billion purchase by another Saudi state-controlled company, petrochemical producer Saudi Basic Industries Corporation. The agreement will end up raising money for the country's sovereign securities fund, which owns a majority stake in Sabic, which the chemical company is known for.
Since Prince 201, Prince Mohammed, the de facto ruler of the kingdom, has had great plans for Aramco, the oil-rich country's economic jewel. He wants big sums to invest in Western technology companies such as Uber, part of his attempt to wean the Saudi economy from his dependence on oil.
Nevertheless, Saudi Arabia's oil wealth is the only realistic source of funding for this transition.
When his original plan to take Aramco publicly went into trouble last year, Prince Mohammed turned to the Sabic agreement as an alternative way of raising money. But Aramco officials have suggested that the public offer was only postponed, not interrupted, and can still happen.
If so, the latest investor meetings may show some kind of dressing. An intense, year-long preparation for I.P.O. helped to make bond sales possible. At one time, around 60 bankers and other professionals occupied a floor at Aramco's headquarters in Dhahran, preparing the oil giant's robbery for reports that could be shown to potential investors and poring over continued unresolved issues, including where to list the company, according to a consultant working on the deal.
Bond sales are being closely monitored, not least because of the cloud that has slept over Saudi Arabia since the murder of Mr. Khashoggi in the Saudi consulate in Istanbul last year. Intelligence agencies in the United States and other Western countries have concluded that the Crown Prince ordered the murder.
But this controversy has not been intimidated by big banks such as JPMorgan Chase and Morgan Stanley, who lead the offer and other banks that support roles. JPMorgan and Morgan Stanley refused to comment.
"To the extent that Mohammed bin Salman has become a persona, not grateful in the West, Saudi Arabia does not make persona grata," said Chas W. Freeman Jr., a former US ambassador to Riyadh.
At the beginning of April, Aramco launched a prospectus that showed that it was the world's most profitable company in 2018, with NOK 111 billion in net income and very small debt. Analysts at Moody's Investors Service gave the company a strong A1 credit rating, the same as the Saudi government. Had Aramco been an independent company, it would have earned a higher rating, Moody said.
It has made the bond committee a hot ticket for investors.
"The more someone needs money, the more we will have to give it to them," said Reza Karim, an assistant fund manager for emerging market debt at Jupiter Asset Management, in an interview.
Some analysts said Aramco's history – It was founded by Standard Oil of California – and the reputation of a Western style in the highly conservative realm made it attractive to international investors.
Its enclaves in the eastern part of the country – where American geologists first discovered oil in the 1930s – Similar to American suburbs, with baseball diamonds, cinemas and themed restaurants, in these inhabited areas, women wear headgear and hold serious jobs in areas such as computer science and geology at the company. – The management, "Helima Croft, an analyst at RBC Capital Markets, said." They see it as a center of enlightenment and prosperity in Saudi Arabia. " 002] Still, there is a concern – both inside and outside the company – that the Sabic transaction, and any IPO, could overshadow further distortions of the crown prince and his co-workers. For much of the company's history, the royal family had largely left Aramco's business to a number of professional leaders. But the danger of royal intervention has risen, analysts say, because the Crown Prince and his father, King Salman, no longer govern the country by consensus that their predecessors did.
Although the kings have traditionally been cautious about destroying Saudi Arabia's profit machine, current Saudi leaders seem to be willing to think with Aramco, according to Jim Krane, a Persian yellow expert at Rice University's Baker Institute for Public Policy.
"I see this as a process of adapting Aramco and the kingdom to cope with an uncertain future for oil, rather than a political attack on the king's cash cow," he said.