Saudi Aramco was the world's most profitable company in 2018, beating the earnings of corporate giants Apple and Google, as it shared for the first time its financial performance to rating agencies ahead of its debut international bond.
Moody's investor service said the state-controlled energy giant made $111.1 billion (Dh408bn) in net income and Fitch said Aramco had earnings before interest, tax, depreciation amortisation of $224 billion (Dh822.8bn) last year.
Aramco received the fifth-highest ratings from Fitch Ratings and Moody's Investors Service.
Moody's assigned Aramco an A1 credit rating and Fitch gave it A-plus, which will help the state-owned company attract investor interest in a bond sale to finance its $69bn acquisition of a 70 per cent stake in petrochemical giant Saudi Basic Industries Corporation (Sabic). Fitch's A-plus rating for Aramco is higher than that of Shell, BP and Total.
Aramco, which generates a major chunk of the kingdom's revenues, has traditionally not disclosed its financials. However, it will now have to publish further financial details as part of its bond programme.
"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, a vice president and senior credit officer at Moody's. "These features position it favourably against the strongest oil and gas companies that Moody's rates."
Aramco said it has established a Global Medium Term Note Programme and will conduct a series of fixed income investor meetings starting Monday.
"An offering of US dollar-denominated senior unsecured notes under the [debt] programme may follow, subject to market conditions," Aramco said in a statement on Monday. The paper, if issued, will be listed on London Stock Exchange’s regulated market, it added.
The company has already picked, JP Morgan, Morgan Stanley, Citigroup, Goldman Sachs, HSBC and NCB Capital to manage the offering. Investor meetings will be held in London, New York, Boston, Singapore, Hong Kong, Tokyo, Los Angeles and Chicago, Bloomberg reported.
Saudi Arabia's Energy Minister Khalid Al Falih said in January that Aramco could raise $10bn through the bond sale.
"The company's leverage is conservative and should remain much lower than that of its international peers even after its acquisition of a 70 per cent stake in Sabic, and is more in line with that of Adnoc [Abu Dhabi National Oil Company]," Fitch said.
S&P Global Ratings on Sunday said the acquisition will add value to Aramco as it grows its petchems portfolio. Banking analysts earlier this week said the company will likely tap a combination of bonds and commercial loans from local and foreign banks to fully finance the Sabic acquisition.
"Saudi Aramco benefits from a very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and robust balance sheet," Moody's said. "This provides considerable credit resilience through oil price cycles."
Last year, Aramco postponed its much-awaited initial public offering of 5 per cent of the company, which is estimated to yield as much as $100bn in proceeds for Riyadh. The Sabic deal was cited as the reason for delay in the IPO.
Aramco's financial profile is very conservative. At the end of 2018, its cash balances exceeded balance-sheet debt, Fitch said in the statement. “We project that Saudi Aramco's leverage will remain low, even after the recently announced acquisition of Sabic, which we expect to be predominantly funded from the company's free cash flow,” it said.