The Kingdom of Saudi Arabia intends to issue dollar bonds in two tranches, with maturities of 12 and 40 years. The kingdom has appointed Goldman Sachs, HSBC and JP Morgan to arrange the planned bond sale.
In this context, a document showed that Saudi Arabia had received subscription applications for more than $ 10 billion in two types of bonds.
The CEO of Al-Nefaiei Investment Company, Ali Al-Zahrani, said in an interview with Al-Arabiya that the Corona pandemic imposed new challenges on the general budget of Saudi Arabia, explaining that debt issuances for a period of 12 years and 40 years reflect the desire to achieve the Kingdom’s objectives, from debt issues, relative to The domestic product, in addition to diversifying financing terms, according to the studied need. On the stock market side, an increase in the number of companies’ listings in the Saudi financial market is expected.
The Kingdom has set an initial indicative price of about 165 basis points over 10-year US Treasury bonds for the 12-year tranche and about 3.75% for the forty-year tranche, according to the document issued by one of the banks participating in the process.
Sources had indicated to “Bloomberg” agency on January 12 that the Kingdom of Saudi Arabia was preparing to return to the global capital markets by selling bonds to raise about $ 5 billion to help cover financing needs that increased with the drop in oil prices last year.
Saudi Arabia expects its fiscal deficit to decline this year after spending cuts trimmed its financing needs.
Saudi Arabia surprised investors by turning away from foreign capital markets in the second half of last year, and opting to cover almost all of its budget deficit by borrowing domestically. The total debt owed by the kingdom is approximately $ 228 billion.
Bond sales in emerging markets got off to a swift start this year, as borrowing costs fell following an unprecedented stimulus by central banks to support economies during the pandemic.
Governments and companies in the Gulf will issue about $ 120 billion in sukuk this year, according to Franklin Templeton. That compares to a record $ 126 billion last year.
In addition, oil prices decreased today, Tuesday, as the chances for the rapid approval of a new economic stimulus in the United States receded, while the high number of coronavirus infections raised doubts about the pace of any recovery in demand.
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Brent crude fell 28 cents, equivalent to 0.5%, to $ 55.60 a barrel, while US crude fell 26 cents, or 0.5%, to $ 52.51. The two benchmarks rose about 1% on Monday.
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