Aramco employees are seen at Natural Gas Liquids (NGL) facility in Saudi Aramco's Shaybah oilfield, Saudi Arabia May 22, 2018. REUTERS/Ahmed Jadallah
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Two months after Saudi Arabia pulled a share sale that could have raised $100 billion for its sovereign wealth fund, the kingdom faces a tough sell in convincing bond investors to pick up the tab.A: Aramco's issuance could conceivably be the biggest corporate bond sale if it surpasses the $49 billion Verizon Communications Inc. raised in 2013 to buy a stake in Verizon Wireless Inc. Bond brokers are divided on how much appetite there will be.Q: Can the market absorb a mega Saudi bond?A: Given that Saudi Arabia is an investment-grade issuer, some of the world's biggest sovereign wealth funds are likely to back the Aramco offering nonetheless.Since 2016, the three major ratings firms have knocked down Saudi Arabia's ranking at least one notch.The yield on Saudi Arabia's $5.5 billion of 10-year debt sold in 2016 is now at 4.14 percent – almost 2 percentage points less than the average for sovereign Eurobonds on the Bloomberg Barclays Emerging Markets Hard Currency Aggregate Index.
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