Snake Oil

Saudi Aramco, the Saudi national oil company, is planning a bond issue to fund the purchase of a $69.1 billion majority stake in Saudi Arabia’s national petrochemicals company.  The transaction is being pitched as a mechanism to boost cash in the country’s sovereign-wealth fund to support Crown Prince Mohammed bin Salman’s professed economic reforms.  Just in case you are considering an investment in this scheme consider this. 

The Company has been pretty straightforward that it has no need to tap the bond market to pay for its purchase.  Motassim Al-Ma’ashouq - group treasurer of Saudi Aramco - told potential investors on Monday that the company had no actual financial need for raising proceeds 'given our fortress-like corporate position.'  He described it as a continuation of Crown Prince Mohammed bin Salman’s 'strategic decision' to enter the public markets that began a couple of years ago – a reminder of the Prince's desire to take a part of Aramco public. 

Given the fact that everything in Saudi Arabia is owned or controlled by either the Royal Family or the government hiding in plain sight is evidence that the Royal Mobsters wish to borrow billions to purchase the chemical company from itself. 

This is actually quite clever - a plan to bamboozle non-Islamic investors to give them a pile of cash (that they admit to not needing) to sew one end of the carpet to the other.  You still have the same amount of carpet after the transaction closes.  And you hold the cash you didn't have before. 

Inasmuch as it is clear as mud if the company owner is the government or the king – does the money go to king's personal wealth or to the government?  And while President Trump would tell you that the Saudis are our friends - looks to me like someone is pitching snake oil instead of crude oil.

Let's be serious - the Saudis are not our friends.