AlEqtisadiah from Riyadh
Saudi Aramco posted a net profit of $ 224 billion last year, which is nearly three times Apple's profits that is making it the world's largest profit maker, before its first international bond issue.
It was rated by Fitch and Moody's at A + and A1, respectively.
Aramco is starting meetings with international bond investors this week on the debt deal, which is expected to attract a huge demand from global investors.
The sale of the planned bonds follows the announcement of the acquisition of 70 per cent in Saudi Basic Industries Corporation (SABIC), which is the world's fourth largest petrochemical producer from the Public Investment Fund in a deal worth $ 69.1 billion, which is one of the largest deals in the global chemical industry.
Aramco said the sale of the bonds, which may be split into maturities of three to thirty years, is not linked to the acquisition of SABIC.
In its presentation, Aramco confirmed the company's intention to pay the value of acquisition of separate chips, so that 50 per cent would be paid when the transaction was closed, and the rest would be over two years of internal liquidity and other potential sources.
Aramco said it posted EBITDA of $ 224 billion in 2018.
Apple, which was the world's biggest gainer last year, according to Forbes, posted EBITDA of $ 81.8 billion.
Moody's said Saudi Aramco had a very strong liquidity position of $ 48.8 billion in liquidity compared to $ 27 billion in registered debt.
"The company's balance sheet debt is managed conservatively," the agency said.
It added that it has $ 46.8 billion in banking facilities of which $ 25.5 billion is still available.
According to "the French", Moody's announced that the Saudi company announced a net profit of 111.1 billion dollars last year, which is higher than the net profits of the top five oil companies and generated $ 355.9 billion in revenue.
The five companies were Exxon Mobil, Chevron, British Petroleum, Total and the Royal Dutch Shell, as they together announced a net profit of $ 80 billion.
Based on its financial resources, its huge hydrocarbon inventory and low production cost, the company's rating would have been AA +.
Rehan Akbar, Vice President at Moody's, said, "Saudi Aramco has many of the characteristics of companies classified in the ATA class (top rating), as it has a low level of debt compared to cash flow, in addition to large-scale production, market leadership and access to one of the world's largest hydrocarbon reserves in the Kingdom."
He added, "However, the final rating is restricted to the classification of Saudi Arabia in category (A1) because of the close ties between the government and the company."
Moody's said that Aramco is able to finance the SABIC deal in cash without the need to borrow, considering that the acquisition will lead to "strengthening the commercial sector of the company."
The agency said that the daily production of Aramco oil last year amounted to 10.3 million barrels per day, less than the maximum production capacity of about 1.7 million barrels.
Aramco estimates its proven oil reserves at 227 billion barrels, and its reserves of hydrocarbons at 257 billion barrels of oil equivalent, which is enough for more than half a century with a "high and comfortable level," according to Fitch.
While Fitch stated that based on information provided by Aramco, 5 per cent of its initial public offering is still outstanding.
Saudi Arabia has $ 500 billions of reserves under the control of the central bank.
In addition to these huge reserves, the deal with SABIC will give the Saudi Public Investment Fund a cash flow to implement Vision 2030.
Saudi Aramco said in a bond issue yesterday, Ghawar Field, the largest oil field in the world, contained 58 billion barrels of oil equivalent in its combined reserves by the end of 2018 and 48.3 billion in liquid reserves.
Aramco, the world's largest oil producer, said it expected global crude oil prices to remain volatile after major fluctuations in recent months.
"The fluctuations in the price at which the company can sell crude oil could cause a significant divergence in the results of the company's operations and its cash flows," Aramco said.
Also, Aramco said it planned to complete the acquisition of 70 per cent of Saudi Basic Industries Corporation (SABIC) in 2020.
Saudi Aramco announced yesterday the launch of a global medium-term bond program and will arrange a series of meetings with fixed-income investors.
Under this program, it is possible that non-guaranteed, dollar-denominated bonds will be issued "bonds" based on market conditions.
The bonds, if issued, will be on the official list with the UK listing authority and are acceptable for trading on the London Stock Exchange.
According to Aramco's statement, this announcement does not constitute an offer for sale or urging the purchase of any securities, nor will there be a proposal, or the solicitation or sale of any securities in any State or Territory in which such offering, solicitation or unlawful sale is made.
The bonds have not been registered and will not be registered under the US Securities Regulations of 1933, as amended, and will not be offered or sold in the United States or to US persons without registering or applying exemption from registration requirements.