Saudi economy
The kingdom sold $10 billion in debt in January
Saudi Arabia is considering borrowing more debt in foreign currencies besides the dollar this year, as it focuses on refinancing some of the debt to reduce part of its outstanding floating rate debt.
The CEO of the National Center for Debt Management, Hani Al-Madini, said in an interview: “We have not finished with interest rate risks.. That is why we were accelerating issuances due to the positive momentum in the market that we witnessed at the beginning of 2023,” according to “Bloomberg” and viewed it. Al Arabiya.net.
Despite forecasting another budget surplus in 2023, Saudi Arabia raised $10 billion from a bond sale in early January in the largest emerging market sovereign deal in nearly 3 years.
Rising crude oil prices helped push government finances into surplus for the first time in nearly a decade last year.
The kingdom had already financed about 48 billion riyals ($12.8 billion) of refinancing needs for this year.
The sale of the bonds in January means that it has implemented most of the borrowing plans scheduled for 2023, according to Bloomberg.
However, the government is looking at different borrowing, with Madani explaining that options include the euro or other international currencies as well as green bonds.
He added that any other issuance would be “subject to market conditions,” noting that borrowing is also being considered “to accelerate the implementation of the goals of Vision 2030” to diversify the economy of the world’s largest oil exporter.
Fixed-rate debt will account for about 90% of government borrowing by the end of the year, as the Debt Management Office looks to stabilize rates pending further increases, according to the head of the National Debt Management Center.
Al-Madani indicated that at the end of last year, fixed-rate debt accounted for about 85% of total loans.
“We have a very strong solvency when it comes to absorbing the high interest rate environment,” he emphasized.
And although US Federal Reserve Chairman Jerome Powell acknowledged last week that price pressures are easing, he also reiterated the central bank’s plan for further increases.
The outlook for a more hawkish policy was reinforced on Friday as data showed that employment rose unexpectedly in the world’s largest economy and unemployment fell to a 53-year low in January.
The yield on Saudi Islamic bonds due in 2028 fell to 4.296% from 4.494% at the beginning of the year.
Separately, Saudi Arabia’s Public Investment Fund began selling green bonds on Tuesday, the second time in 4 months it has been used by investors focused on ethical finance.
The fund raised $3 billion in October from its first green bond sale, which included a 100-year tranche.
