Saudi Aramco bond: memory loss?

Author: | Published: 23 Apr 2019
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Six months isn't a very long time. It would seem ample time, however, for the world to forget about Saudi Arabia's alleged role in the death of Jamal Khashoggi, the journalist and government critic killed in the consulate in Istanbul last October.

After Khashoggi was murdered, unconfirmed reports suggested that foul play within the Saudi government had led to the dissident's death. The US and other global players condemned the move, and took steps to blacklist a number of Saudi nationals for their involvement. In February, the EU went as far as to add Saudi Arabia to its dirty money list which, although not explicitly defined as a list of countries under sanction, does suggest that authorities consider the country a risk to the financial health of the union.

The problem is, the case has not been solved, and the country has made little effort to deny government involvement. Yet the world has moved on – with aplomb.

In early April, Saudi Arabia took a major step onto the global financial stage to fund the aspirations of its crown prince, issuing an enormous $12 billion worth of bonds for its state-run oil company Aramco, in what was one of the most oversubscribed debt offerings in history.

Reports suggest that demand for the bond was as high as $100 billion: more than eight times what was actually issued. This allowed Aramco to price the bond at a lower yield than the $7.5 billion sovereign bond the government itself issued in January.

The deal's oversubscription shows the short attention span of some. Although a quick selloff in the days following the issuance did occur – suggesting the order book is perhaps not to be fully trusted – that so many can swerve so quickly shows where the real fidelities lie.

It is a largely unsurprising but nonetheless uncomfortable truth that the death of an outspoken journalist within the confines of a consulate doesn't draw the ire of the global community for longer than three months. In addition, the lack of government-imposed sanctions from any global superpower – especially the US – means that legally, such investors are doing nothing wrong.

The simple fact is that money talks, and when it does, those best-positioned to profit are occasionally inclined to put principles to one side and listen. That being said, should this decision fall on the shoulders of the banking sector? Should the US government, the United Nations and other global influencers be doing more to prevent this sort of malfeasance from going on unperturbed? Someone probably should.