Saudi Aramco gets first credit ratings (Moody - A1, Fitch A+) ahead of bond debut. Thoughts?

WIth many investors in the market increasing their allocation into bonds, I think Saudi Aramco is certainly a very stable company to look at with its sheer size that can weather recessions. Even without Moody and Fitch's rating, posting such numbers and operating in the defensive crude oil industry, I would posit Aramco's strong reliability of cashflows to generate financial stability and therefore low default risk of their bonds. I would say- if any corporate company, Saudi Aramco would be the one whose risk matches most national treasuries.

Hello!

Saudi Aramco is by far the world's most profitable company, generating a net income of $111.1 billion last year. It beat Apple ($59.5 billion in net income in 2018) and other oil companies like Royal Dutch Shell ($23.9 billion) and Exxon Mobil ($20.8 billion).

A potential reason for the first credit ratings is that currently Aramco has achieved an enormous size and profitability without borrowing or selling stock to investors, a very low current debt level ($48.8 billoin in cash against $27 billion in debt) gives them a huge amount of room to issue debt. Additionally, Moody analyst commented that Aramco has a strong competitive advantage which stems from its "large scale of production and vast hydrocarbon resources". The group has 257 billion barrels of oil equivalent, representing more than 50 years of reserves based on current production levels. As of Dec 2018, Aramco had $86 billion in free cash flow.

With a positive free cash flow, low leverage and strong reserves (resources) for the future, Aramco is an attractive investment.