Search DubaiPRNetwork.com

Home >> Banking & Investments

Saudi Aramco's Debut IPO Could Support The Sovereign's Net Asset Position

Sunday, November 17, 2019/ Editor -  

Share

Home >> Banking & Investments

November 17, 2019:    S&P Global Ratings said today that Saudi Aramco's forthcoming IPO on the Saudi Stock Exchange (the Tadawul) could enable the sovereign to further strengthen its net asset position.

And, if subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia (unsolicited; A-/Stable/A-2). Saudi Arabia currently fully owns Saudi Aramco, which is the world's largest company by a significant margin. It plans to sell about 1%-3% of the company through an IPO.
 
We understand that the bulk of the funds raised will go to the government or the Public Investment Fund, potentially adding to the sovereign's already strong fiscal net asset position of 72.7% of GDP.

Productively deployed, we believe the assets could also help maintain growth potential through our three-year ratings horizon. Public investment in Saudi Arabia is forecast to remain quite high, even though the sovereign has implemented some fiscal belt-tightening. Government's expenditure is intended to support the non-oil economy and private sector demand. Our current forecast for average GDP growth is 1.6% per year in 2019-2022.
 
Our ratings on Saudi Arabia continue to be supported by its strong external and fiscal asset positions. The ratings are constrained by high geopolitical risks, sizable fiscal deficits, and the limited transparency of its institutional framework and the reporting of government assets. (see 'Saudi Arabia 'A-/A-2' Ratings Affirmed; Outlook Stable,' Sept. 27, 2019).

Saudi Arabia will remain by far the largest shareholder in Saudi Aramco and plans to retain control over the company's business and financial strategy. We continue to consider that the overall credit profiles of Saudi Arabia and Saudi Aramco are closely linked. As a result of the recent bond and forthcoming equity offerings, there has been an increase in financial and operating disclosures.

In our view, this has improved transparency and is supportive for investors. The move is also an important milestone for the development of capital markets in Saudi Arabia. The IPO will also help to benchmark Saudi Aramco against regional and global peers.

 


Previous in Banking & Investments

Next in Banking & Investments


Home >> Banking & Investments Section

Latest Press Release

Hyundai Motor Unveils Rendering of New Elantra N Line

David Gandy Stars in Jaguar Racing Podcast Series - Re:Charge @ Home

67 Minutes Will Never Be Enough Empathy

Inauguration of Dubai Route 2020 Metro

UFC 251

IFS Named a Leader in the Gartner 2020 Magic Quadrant for Field Service Manageme ...

New York's Favorite Burger is Shakin' it up in Deira Dubai

Commodity Weekly: Gold Pops, Oil Drops as Covid-19 Maintain Its Grip

Etihad Airways to Resume Special Passenger Services to and From Abu Dhabi to Six ...

Travellers Should ‘Wear to Care' in the New Normal says WTTC

Dubai Customs' 2nd Consultative Council discusses challenges and opportunities o ...

Cebu Pacific resumes Manila-Dubai route starting July 12

Hollywood star Fassbender contests European Le Mans Series with Porsche

American School of Creative Science in Al Barsha will be Shifting to Nad Al-Sheb ...

Middle East Airlines (MEA) Receives its First Airbus A321neo

Schneider Electric Global Supply Chain recognized with 2020 Power of the Profess ...

Renault of Arabian Automobiles Partners With Adcb, Presents Customers 72 Hours o ...

Etihad Airways Announces a New Codeshare Agreement With Air Arabia Abu Dhabi

Post-COVID-19 Green Recovery Must Embrace Sustainable Aviation Fuels

Discover the Perfect Gift This Eid Al Adha From Rasasi Perfumes