Saudi Aramco IPO to boost government finances, support economic growth: S&P

Saudi Arabian Oil Co.’s (Saudi Aramco) upcoming listing on the Saudi Stock Exchange (Tadawul) could help strengthen the government’s net asset position, with the proceeds potentially raising the kingdom’s longer-term economic growth, global ratings firm Standard & Poor’s (S&P) said.

“The bulk of the funds raised will go to the government or the Public Investment Fund (PIF), potentially adding to the sovereign’s already strong fiscal net asset position of 72.7% of GDP,” S&P said in a note.

“Productively deployed, we believe the assets could also help maintain growth potential through our three-year ratings horizon.”

Saudi public investment is expected to remain very high, with GDP growth averaging 1.6% per annum from 2019 to 2022.

The rating agency rates Saudi Arabia as A-/A-2 with a stable outlook. The ratings were constrained by high geopolitical risks, sizable fiscal deficits and the limited transparency of the kingdom’s institutional framework and the reporting of government assets.

The world's largest oil exporter will begin its IPO on Nov. 17 with the book-building process for institutional investors running until Dec. 4, while the retail offering period will close on Nov. 28, according to data compiled by Argaam.

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