ABU DHABI: Saudi Aramco the world’s biggest oil company, attracted significant demand for its Islamic bond sale on Wednesday, as investors appeared unperturbed by an Israeli attack on neighbouring Qatar just 24 hours earlier.
Order books for the two-part Islamic bonds, or sukuk, stood at more than $16.5 billion at around 1215 GMT, fixed income publication IFR reported, with pricing expected later in the day.
Saudi Aramco did not immediately respond to a request for comment from Reuters on the transaction.
Aramco’s debt sale comes amid a surge in bond issuance from the Gulf region this month, including Saudi Arabia’s $5.5 billion sukuk sale, driven by strong investor demand and heavy inflows into bond funds.
But it is also a test of investor appetite for regional deals a day after Israel attempted to kill the political leaders of Hamas with airstrikes on Qatar, escalating its military action in the Middle East.
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Aramco, in which the Saudi government is the majority shareholder, planned to tap debt markets amid weaker oil prices, Reuters reported last week, and could raise between $3 billion and $4 billion from the sale.
“I don’t see much reaction (from the attack on Qatar),” said a Saudi-based investment banker, requesting not to be named. Pricing on the Aramco deal is expected to tighten ahead of launch due to the sizeable order book, the banker said.
Early indications set a target of 105 basis points over U.S. Treasuries for the five-year tranche and 115 basis points for the 10-year portion.
Al Rajhi Capital Company, Citi, Dubai Islamic Bank, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JPMorgan, KFH Capital, and Standard Chartered Bank are mandated active bookrunners on the transaction.
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