A Saudi Aramco logo. Picture: CHRISTOPHER PIKE/BLOOMBERG
Despite the huge profit, the state-owned oil company was rated by credit agencies at par with Saudi Arabia, meaning the kingdom's sluggish economy will weigh on Aramco's cost of borrowing as it prepares its bond market debut. “Saudi Aramco’s rating is constrained by that of Saudi Arabia ,” Fitch said. “This reflects the influence the state exerts on the company through taxation and dividends, as well as regulating the level of production in line with its Opec commitments.”Credit ratings allow investors to compare and assess the credit quality of bond issuers and their debt securities, and are important in determining how much borrowers have to pay.
Aramco will start meeting international bond investors this week for the much-anticipated debt transaction, expected to attract hefty demand from global investors. Aramco intends to pay for the acquisition in tranches, with 50% at the closing of the transaction and the remainder over a two-year period, from internal cash generation and, potentially, other resources, the company said in its presentation.Aramco had earnings before interest, tax and depreciation of $224bn in 2018. By contrast Apple, which according to Forbes was the world's top company in terms of profits last year, had normalised core earnings, or ebitda, of $81.8bn.
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