Being an Analyst Note issued by Proshare Research on March 13th, 2023

Saudi Aramco Reports Record Profits as NNPCL Position Remains Hidden 

Saudi Aramco has declared a record US$161bn (£134bn) profit for 2022, the largest annual profit ever recorded by an oil and gas company, spurred by surging global demand and skyrocketing energy prices. The 95% state-owned oil company recorded a 46% year-on-year (Y-o-Y) increase in profits from US$110bn in 2021, almost tripling Exxon’s US$56bn profit in 2022, and more than four times that of Shell’s US$39.9bn, Chevron’s US$36.5bn and BP’s US$27.7bn (see illustration 1 below). Following its Q4 trading, the world's largest oil company declared a US$19.5bn dividend. Its board has also suggested that bonus shares be issued, with investors receiving one more share for every ten they own. Analysts have drawn a sharp contrast between Saudi Arabia’s oil gain, Saudi Aramco, and Nigeria’s NNPCL, noting that both companies are not on the same level. 

Illustration 1:

Analysts say Saudi Aramco, which is listed on Riyadh Stock Exchange, has not been marred by underinvestment, inefficiency, and lack of transparency that continue to threaten the Nigerian national oil company. Meanwhile, Saudi Arabia currently produces over 11 million barrels per day (b/d), meeting its OPEC quotas with some spare capacity, while Nigeria's output stood at 1.3mb/d in February, after recovering from a decades-long low of 900,000 b/d last year.  Analysts maintain that the listing of NNPCL will put it on a path to track the success of Saudi Aramco. 

Investors rally at AfDB US$2bn 5-year Bond Issuance

African Development Bank AfDB has issued a five-year global benchmark bond to raise two billion dollars. The bond was issued on March 7, 2023, and will mature by March 14, 2028. According to the bank, bond issuance is part of its funding strategy of issuing large liquid benchmark transactions. The issuance has a coupon of 4.375% and a re-offer price of 99.73%. The lead managers of the bond include Barclays, Credit Agricole CIB, Deutsche Bank, J.P Morgan, and T.D securities while the co-lead manager is CastleOak securities.  The final order book closed in excess of USD 3.5bn with more than 90 orders. Analysts believe the strong rating of Aaa/AAA and a stable outlook from Moody’s and S&P supported the large investor’s interest in the issuance. For the geographic distribution of investors, EMEA had the highest at 64%, followed by Americans at 24% and Asia at 12% with Central banks/ official institutions being the highest investors. 

Mexican Unicorn Clara Bags US$90m in Debt Financing 

Less than a year after bagging a US$150M debt facility with Goldman Sach, Mexican unicorn Clara has secured a US$90m debt financing deal. This was led by US debt provider Accial Capital amid its Latin America expansion mission. The funds will be concentrated on helping Clara to increase its footprint in Brazil where it wants to more than double its customer base to up to 5000 companies. 

Having multiple debt facilities can make it more difficult for a company to manage its debt obligations as it increases the company’s financial risk and debt burden. Nonetheless, debt financing does not dilute equity and has been increasingly argued to encourage founders to give priority to building innovative products that can withstand adverse economic climates. It also allows the company to focus on accurate execution and planning to ensure proper product-market fit. Even in Africa, statistics show that debt funding has grown significantly in recent years. A Partech report noted that VC debt funding to African startups doubled to US$1.5bn in 2022 from US$767m reported in the previous year. 

Binance Set to Train Ukraine’s Cyberpolice and Security Service

The world’s largest digital asset exchange, Binance, has provided training to Ukrainian law enforcement agencies and regulatory bodies in the form of online seminars for their staff interested in learning more about cryptocurrencies and blockchain technologies. A representative of the crypto trading platform informed the participants about Binance’s anti-money laundering policy which was developed in a bid to put an end to criminal activities related to fraud in the country.

Despite the ongoing war between Ukraine and Russia, there have been financial crimes in the country threatening the stability and security of the country’s financial ecosystem and the only way to put an end to this is to unite efforts to prevent cybercrime. No doubt that the Ukrainian law enforcement agencies have been actively involved in operations against crypto-related crime, the Cyberpolice previously supported the legalization of cryptocurrencies in the country. Analysts are of the opinion that these training courses would speed positive reactions in the market and other exchanges would want to replicate the same by conducting training courses for law enforcement agencies across the country where cryptocurrency is widely accepted.