Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Arabia’s Debut Bond Offering Received Orders of $67 Billion | ASHARQ AL-AWSAT English Archive 2005 -2017
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Investors monitor screens displaying stock information at Saudi Arabia’s Tadawul stock exchange. PHOTO: FAISAL AL NASSER/REUTERS

Riyadh–Saudi Arabia’s debut bond offering was described as the biggest ever bond sale from an emerging-market nation, as total subscription requests for Saudi international bonds amounted to $67 billion, which is equivalent to 382 percent of the Saudi initial offering of $5.17 billion.

The high demand on Saudi dollar-denominated bonds has revealed foreign investors’ big thirst to invest in Saudi government bonds. This has confirmed hopes in the promising Saudi economy, which is expected to flourish in 2017 despite the decline in growth levels witnessed in 2016.

In a statement issued on Thursday, the Saudi finance ministry said it has ended the pricing and allocation of the first offering of international bonds denominated in U.S. dollars as part of the international program for the issuance of public debt tools.

The ministry said the total sum of the first offering was $5.17 billion (65.6 billion Saudi riyals), while the total subscription requests for these bonds amounted to $67 billion (251.3 billion Saudi riyals).
On Wednesday, Bloomberg said the Saudi international bond offering was the biggest ever bond sale from an emerging-market nation.

It quoted well-informed sources as saying that the Saudi government sold dollar-denominated bonds due in five years yielding 135 basis points more than similar-maturity U.S. Treasuries, 10-year notes at a spread of 165 basis points and 30-year securities at 210 basis points.

The sources added that the Kingdom raised $5.5 billion in each of the five and 10-year bonds and $6.5 billion in 30-year debt.

Bloomberg also said that the offering followed a week of presentations to prospective buyers, taking place in London, Los Angeles, Boston and New York, at which officials emphasized the Kingdom’s efforts to diversify the $650 billion economy away from oil.

In comments to Asharq Al-Awsat newspaper, Economic Expert Fahad Al-Mashari said that the high demand on Saudi dollar-denominated bonds was a major indicator of worldwide trust in the Kingdom’s economy. He added that Saudi financial markets would positively react to these encouraging developments.