Saudi Arabia considers paying contractors with IOUs

[Muck]

Wonder if it would come true and if so, who's cash flows would be affected. Hyflux? Boustead? Rotary Engineering?


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Saudi Arabia is considering using IOUs to pay outstanding bills with contractors and conserve cash, according to people briefed on the discussions.

As payment from the state, contractors would receive bond-like instruments which they could hold until maturity or sell on to banks, the people said, asking not to be identified because the information is private. Companies have received some payments in cash and the rest could come in the "I-owe-you" notes, the people said, adding that no decisions have been made on the measures... ...

http://www.bloomberg.com/news/articles/2...-with-ious

[GPD]

Are the contractors given a better compensation with the IOUs and are they given a choice?

Think sub-con will be paid in IOU as well......and workers in IOUS and consumer IOUs retail shop as well.

Also why these people knowing that the information is private but still reveal them to the reporter?

[CityFarmer]

Are the contractors given a better compensation with the IOUs and are they given a choice?

Think sub-con will be paid in IOU as well......and workers in IOUS and consumer IOUs retail shop as well.

Also why these people knowing that the information is private but still reveal them to the reporter?

There is a common strategy, to "test water" with grapevine channel, before formal announcement. 

[sgd]

it goes back to what I said in the oil thread.

If you are in deep financial problem, do you want to let everybody know about that or you want to put up a show let everybody continue to think everything is ok, business as usual.

If you tell people you are in trouble will suppliers still extend you credit, will you still have friends, will banks still lend you money, will investors still be interested in parking their cash with you?


You consider the low oil price is entirely in control by the Saudi Royals and the problem is their own making. 

By virtue of being the biggest supplier of a resource that everybody wants in the world. They are the MARKET MAKER of oil, they can fix their problem anytime by turning off the tap from 1 or 2 oil fields.

[Muck]

it goes back to what I said in the oil thread.

If you are in deep financial problem, do you want to let everybody know about that or you want to put up a show let everybody continue to think everything is ok, business as usual.

If you tell people you are in trouble will suppliers still extend you credit, will you still have friends, will banks still lend you money, will investors still be interested in parking their cash with you?


You consider the low oil price is entirely in control by the Saudi Royals and the problem is their own making. 

By virtue of being the biggest supplier of a resource that everybody wants in the world. They are the MARKET MAKER of oil, they can fix their problem anytime by turning off the tap from 1 or 2 oil fields.

Sorry I don't get it, but the point you're making is...?

[sgd]

it goes back to what I said in the oil thread.

If you are in deep financial problem, do you want to let everybody know about that or you want to put up a show let everybody continue to think everything is ok, business as usual.

If you tell people you are in trouble will suppliers still extend you credit, will you still have friends, will banks still lend you money, will investors still be interested in parking their cash with you?


You consider the low oil price is entirely in control by the Saudi Royals and the problem is their own making. 

By virtue of being the biggest supplier of a resource that everybody wants in the world. They are the MARKET MAKER of oil, they can fix their problem anytime by turning off the tap from 1 or 2 oil fields.

Sorry I don't get it, but the point you're making is...?

to put it shortly and bluntly I think they running out of oil, 

if the major fields are really in decline and the newer ones could really be covering the shortfall what happens when the day comes major fields run dry how will they meet domestic energy demands and if they also have to sell oil overseas?

you skim the news on saudi lately they building solar panels, nuclear powerplants for generating electricity, huge arms deals with canada and uk

are they preparing for the day when they are no longer a major power in the middle east?

[Muck]

I guess only time will reveal all. In the meantime, let's see if the Saudi Aramco USD$2t will help the country in its recently publicized economic vision to diversify its economy away from its addiction to oil.

[Dividend Knight]

I guess only time will reveal all. In the meantime, let's see if the Saudi Aramco USD$2t will help the country in its recently publicized economic vision to diversify its economy away from its addiction to oil.

If they follow the Norwegian Sovereign Wealth Fund model, they should do fine over the long-term IMO.

[sgd]

Skeptics point to the fact that rig counts in Saudi Arabia have tripled over the past decade -- even though output hasn't gone up nearly as much. At the same time, Saudi stockpiles of oil have declined by around 30 million barrels since October 2015.
"If they only need to turn valves on to flood the market, why are Saudi oil inventories falling?"

http://money.cnn.com/2016/05/25/investin...abia-pump/

[specuvestor]

^^ interesting view on saudi rig count, though I see more like doubled rather than tripled:

http://phx.corporate-ir.net/External.Fil...U9MQ==&t=1