Aramco Can Do Whatever It Likes With Bond Money
Investors won’t mind if the oil giant uses bond funds to pay dividends. It's one of the world’s biggest companies, and the yields are generous.
Another gusher.
Photo: Bloomberg
Is it wise to lend money to a company that’s simply going to use it to pay its equity holders a fat dividend? If it’s one of the world’s largest and most profitable businesses, the answer is probably yes.
Saudi Aramco is making its second big foray into the international bond markets with a bumper slab of five new bonds, ranging from three to 50 years in maturity. Expectations are that the giant oil producer will only raise about $6 billion, half the size of its hugely oversubscribed inaugural debt offering in April 2019. (My colleagues at Bloomberg Intelligence think a follow-up sale may be needed.)