Saudi Aramco, the world's top oil producer, has been rated A+ by Fitch in its first-ever credit rating, ahead of the state oil giant's first global bond sale and following 2018 earnings that dwarfed those of worldwide oil majors.
It comes as Aramco prepares to sell bonds on the global market to help finance the purchase of a 70% stake in Saudi petrochemical behemoth SABIC for $69.1 billion, effectively merging the kingdom's two largest companies.
"Saudi Aramco has many characteristics of a Aaa-rated corporate (top rating), with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world's largest hydrocarbon reserves", said Rehan Akbar, vice president at Moody's.
It handily beat Apple ($59.5 billion in net income in 2018) and Alphabet, the parent company of Google ($30.7 billion), and ran laps around other oil companies like Royal Dutch Shell ($23.9 billion) and Exxon Mobil ($20.8 billion).
The company's credit rating, A1 from Moody's, is tied to that of Saudi Arabia given the huge intrinsic links between the two entities. That's below what Big Oil companies such as Shell and Total SA enjoy, at $38 and $31 per barrel, respectively.
The SABIC acquisition is dubbed as a plan B for the Saudi government; as an initial public offering (IPO) of Aramco initially planned for 2018 would have valued the company at $2 trillion.
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"Saudi Aramco is the world's largest oil producer by volume, the only oil producer in Saudi Arabia (outside of the neutral zone between Saudi Arabia and Kuwait), and the custodian of the kingdom's vast reserves", Fitch said.
"Saudi Aramco benefits from a very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and robust balance sheet", Moody's said.
The firm has $48.8bn in cash at the end of 2018, Moody's reported, while cash flow from operations hit $121bn and it spent $35.1bn on capital expenditure while paying out $58.2bn in dividends. "This reflects the influence the state exerts on the company through taxation and dividends, as well as regulating the level of production in line with its OPEC commitments".
Aramco told potential bondholders it generated operating cash flow of $121 billion in 2018. Exxon reported cash flow a year ago of $36 billion. They are joined by Citigroup, Goldman Sachs, HSBC and NCB Capital as bookrunners.
In another assessment issued Monday, Fitch Ratings said Aramco posted profits of $224 billion before interest, tax, depreciation and amortization.
If he achieves the target, the offering will raise a record $100 billion by selling a 5 percent stake, dwarfing the record $25 billion raised by Chinese internet retailer Alibaba Group Holding Ltd.in 2014.
Aramco also dethroned Apple as the world's most profitable firm.