Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Arabia Prepares for Biggest International Bond Sale | ASHARQ AL-AWSAT English Archive 2005 -2017
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A Saudi investor monitors the Saudi Stock Exchange, or Tadawul (Photo: FAYEZ NURELDINE/AFP/Getty Images)

London – Saudi Arabia is set to begin its first international bond sale on Wednesday, as experts expect a high demand for the Saudi dollar-denominated obligations.

Sources close to the matter quoted by Bloomberg said that the Saudi government aims to sell dollar-denominated bonds due in five years for about 160 basis points over similar maturity U.S. Treasuries, 10-year notes at a spread of 185 basis points and 30-year securities at 235 basis points.

Bloomberg noted that the proposed pricing is about 60 basis points higher than Qatar’s similar maturity bonds.

The guidance compares with a spread of 102 basis points for Qatar’s five-year dollar bonds over similar-maturity Treasuries, 125 basis points on its 10-year notes and 174 basis points on 30-year securities, according to data compiled by Bloomberg.

Meanwhile, a report published by the Financial Times on Tuesday said that Riyadh is thought to be targeting a sale between $10 billion and $15 billion, making it the largest issue of international debt in the Middle East and a potential rival to Argentina’s record-breaking $16.5 billion emerging market bond sale earlier this year.
“Prices are expected to tighten when the sale is finalized on Wednesday and bankers say early demand has been strong,” the report added.

In this context, international observers told Asharq al-Awsat newspaper that the demand would be very high for the Saudi dollar-denominated obligations, thanks to several factors, including the increasing trust in Saudi Arabia’s economic sector and the newly launched Saudi Vision 2030.

The Financial Times stressed that Saudi Arabia’s first international bond is part of a radical plan “to wean the economy off its reliance on oil and was first announced in November 2015, as oil prices fell to $50 a barrel, from $115 a barrel the previous year.”