SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Saudi Arabian oil firm Aramco and petrochemical firm SABIC will lead and represent 60% of the $1.3tn investments by the local private sector, as announced by Saudi Arabia’s Crown Prince Mohammed bin Salman. The aim is to mobilize the private sector of Saudi Arabia in order to diversify the economy from its reliance on oil exports.

These investments are part of the wider 2030 programme worth $3tn, which includes expected investments of $800bn from the Public Investment Fund (IPF) and $1tn under the new Gulf Arabs state’s investment strategy, of which $530bn are foreign investments. 24 companies, majority listed on the local bourse, will invest $530bn by 2025 and a further $800bn by 2030. PIF is a shareholder in most of the participating firms. “The new Shareek (Partner) programme will help the private sector create hundreds of thousands of new jobs and will boost the contribution of the private sector to GDP by up to 65% by the end of the decade,” said Crown Prince Mohammed bin Salman. He also added that the largest participating companies are requested to lower their dividends so that capital spending can be raised. Aramco’s shares’ dividend payments will remain stable. The Saudi government will in return aid with regulations and increase subsidies amongst other incentives. The government also announced plans to offload its shares in firms and to IPO coming projects in the next few years.

“We will recycle the money. We shouldn’t keep our shares forever. Whatever mature investment we have we have to IPO. So for example if you own 70% of a company, PIF should maintain majority at 30% and sell 40%,” the crown prince stated. Also, Aramco is said to issue additional shares in a move to support the sovereign wealth fund PIF, which is collaborating with other sovereign wealth funds on “Invest in Saudi”, a fund sized at $130-260bn. PIF is backing national mega-projects, such as the planned Neom economic zone worth $130bn and Qiddya entertainment hub

Saudi Aramco´s USD bonds were largely flat with it´s 2.875% 2024s at 105.205, yielding 1.13% and its 4.25% 2039s at 108.291, yielding 3.62%.

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