Aramco's incredibly successful bond offering shows the company may not have to tap equity markets as planned.
Aramco's hugely successful bond offering on Tuesday may be the final nail in the coffin for the Saudi oil giant's much-anticipated and long-delayed stock market debut.
"To the degree to which the goal of the IPO was seen as providing more funding for the Public Investment Fund ... if you can do this with a bond offering, the question is do you need an IPO?" said Helima Croft, global head of commodity strategy at RBC Capital Markets, referring to the Saudi sovereign wealth fund.
Disclosure requirements for an IPO are much higher than for a bond offering. Diwan says it might not make much sense for Aramco to subject itself to that level of disclosure, particularly if the Saudis can raise money cheaply on the bond market. Analysts also caution that the scramble for Aramco debt is not a direct indication of interest in owning the company's shares. Debt investors are typically more passive than shareholders, who have greater say in how the company is run.
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