Saudi Aramco Gets First Credit Ratings Ahead of Bond Debut

Saudi Aramco Saudi Arabia

Aramco had a net income of $111 billion past year.

"Saudi Aramco has many characteristics of a Aaa-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world's largest hydrocarbon reserves", said Rehan Akbar, senior credit officer at Moody's.

According to FactSet, Aramco made a whopping $111 billion in 2018 and generated $359.9 billion in revenues.

Saudi Aramco, the world's biggest oil producer, made core earnings of $224 billion past year, nearly three times as much as Apple (NASDAQ:), figures from the state-owned company showed on Monday ahead of its debut global bond issue. The company, which began as a United States (US) venture with a concession for oil rights in Saudi Arabia, was fully acquired by the Saudi government in 1980. The ratings were limited by Aramco's close ties to the Saudi government.

Fitch Ratings, which also saw the accounts, said Aramco reported $224 billion in earnings before tax and depreciation, while maintaining low debt levels. Such moves are a part of an attempt by Saudi Arabia lessen the government's dependence on oil and to create new income streams. Specifically, Fitch noted "the influence the state has on the company through regulating the level of production, taxation and dividends".

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That's now changed under King Salman and his son, Crown Prince Mohammed bin Salman, who have taken a much more active role in controlling various power centres in the kingdom, including Aramco, Wald said. The first-ever ratings for Aramco come as it prepares to sell bonds to finance the purchase announced last week of a majority stake in SABIC.

The company had made headlines when it inked a deal for purchasing a 70 percent stake in SABIC from the Saudi Public Investment Fund (PIF).

It comes as Aramco prepares to sell bonds on the global market to help finance the purchase of a 70-percent stake in Saudi petrochemical behemoth SABIC for $69.1 billion, effectively merging the kingdom's two largest companies.

Saudi Energy Minister Khalid al-Falih said earlier this year Aramco's planned bond sale would raise around $10 billion, but banking sources said the transaction could be larger.

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