You are here: Home » PTI Stories » National » News
Business Standard

Saudi plans up to USD 17.5 bn in first bond issue: report

AFP  |  Riyadh 

plans to raise up to USD 17.5 billion from its first international bond issue, a media report said today, as analysts expect strong buyer interest.

It would make the Saudi issue the largest ever from an emerging-market nation, said Bloomberg News, which cited two people with knowledge of the offer.



The figure exceeds the USD 15 billion which an analyst had previously told AFP could be the value of the issue.

Saudi Arabia, the world's largest oil exporter, projected a budget deficit of USD 87 billion this year after a fall in oil revenues, which still account for most of its income.

To cover the shortfall, is re-orienting its economy by imposing unprecedented subsidy cuts, slowing government projects, and in September it chopped cabinet ministers' salaries, among other measures.

The kingdom last week began meetings with potential investors ahead of the bond issue.

According to the sources cited by Bloomberg News, the kingdom plans to sell dollar-denominated five-year bonds yielding about 140 basis points above US treasuries with similar maturity.

will also issue 10-year notes and 30-year securities at a premium, the report said.

It added the proposed pricing is also higher than neighbour Qatar's bonds which offer a similar maturity.

Christopher Dembik, global head of macroeconomic research at France's Saxo Bank, told AFP the kingdom's offer "is going to arouse strong interest on the part of investors", and could be four or five times oversubscribed.

He said investors are desperately looking for yield, and the Saudi offer "will be certainly slightly above that of its neighbours because of its less favourable sovereign debt rating and a recent global trend towards higher sovereign rates," he said.

has already issued domestic bonds but that has led to a tightening of bank liquidity, according to Patrick Dennis, lead Middle East economist at Oxford Economics in London.

"So that's the main reason why they're now borrowing overseas," he told AFP.

Saudi banks' loan-to-deposit ratio rose for the fifth consecutive month in August, reaching 90.8 per cent, because of faster growth in credit relative to deposits, Riyadh's Jadwa Investment said in a report this month.

Borrowing abroad also reduces the drain on the kingdom's foreign reserves, Dennis said.

Official data show those reserves declined to USD 562 billion in August from USD 732 billion at the end of 2014.

The reserves remain very large but their rapid drawdown shows a need for diversified funding, Dennis said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Saudi plans up to USD 17.5 bn in first bond issue: report

Saudi Arabia plans to raise up to USD 17.5 billion from its first international bond issue, a media report said today, as analysts expect strong buyer interest. It would make the Saudi issue the largest ever from an emerging-market nation, said Bloomberg News, which cited two people with knowledge of the offer. The figure exceeds the USD 15 billion which an analyst had previously told AFP could be the value of the issue. Saudi Arabia, the world's largest oil exporter, projected a budget deficit of USD 87 billion this year after a fall in oil revenues, which still account for most of its income. To cover the shortfall, Saudi Arabia is re-orienting its economy by imposing unprecedented subsidy cuts, slowing government projects, and in September it chopped cabinet ministers' salaries, among other measures. The kingdom last week began meetings with potential investors ahead of the bond issue. According to the sources cited by Bloomberg News, the kingdom plans to sell ... plans to raise up to USD 17.5 billion from its first international bond issue, a media report said today, as analysts expect strong buyer interest.

It would make the Saudi issue the largest ever from an emerging-market nation, said Bloomberg News, which cited two people with knowledge of the offer.

The figure exceeds the USD 15 billion which an analyst had previously told AFP could be the value of the issue.

Saudi Arabia, the world's largest oil exporter, projected a budget deficit of USD 87 billion this year after a fall in oil revenues, which still account for most of its income.

To cover the shortfall, is re-orienting its economy by imposing unprecedented subsidy cuts, slowing government projects, and in September it chopped cabinet ministers' salaries, among other measures.

The kingdom last week began meetings with potential investors ahead of the bond issue.

According to the sources cited by Bloomberg News, the kingdom plans to sell dollar-denominated five-year bonds yielding about 140 basis points above US treasuries with similar maturity.

will also issue 10-year notes and 30-year securities at a premium, the report said.

It added the proposed pricing is also higher than neighbour Qatar's bonds which offer a similar maturity.

Christopher Dembik, global head of macroeconomic research at France's Saxo Bank, told AFP the kingdom's offer "is going to arouse strong interest on the part of investors", and could be four or five times oversubscribed.

He said investors are desperately looking for yield, and the Saudi offer "will be certainly slightly above that of its neighbours because of its less favourable sovereign debt rating and a recent global trend towards higher sovereign rates," he said.

has already issued domestic bonds but that has led to a tightening of bank liquidity, according to Patrick Dennis, lead Middle East economist at Oxford Economics in London.

"So that's the main reason why they're now borrowing overseas," he told AFP.

Saudi banks' loan-to-deposit ratio rose for the fifth consecutive month in August, reaching 90.8 per cent, because of faster growth in credit relative to deposits, Riyadh's Jadwa Investment said in a report this month.

Borrowing abroad also reduces the drain on the kingdom's foreign reserves, Dennis said.

Official data show those reserves declined to USD 562 billion in August from USD 732 billion at the end of 2014.

The reserves remain very large but their rapid drawdown shows a need for diversified funding, Dennis said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Saudi plans up to USD 17.5 bn in first bond issue: report

plans to raise up to USD 17.5 billion from its first international bond issue, a media report said today, as analysts expect strong buyer interest.

It would make the Saudi issue the largest ever from an emerging-market nation, said Bloomberg News, which cited two people with knowledge of the offer.

The figure exceeds the USD 15 billion which an analyst had previously told AFP could be the value of the issue.

Saudi Arabia, the world's largest oil exporter, projected a budget deficit of USD 87 billion this year after a fall in oil revenues, which still account for most of its income.

To cover the shortfall, is re-orienting its economy by imposing unprecedented subsidy cuts, slowing government projects, and in September it chopped cabinet ministers' salaries, among other measures.

The kingdom last week began meetings with potential investors ahead of the bond issue.

According to the sources cited by Bloomberg News, the kingdom plans to sell dollar-denominated five-year bonds yielding about 140 basis points above US treasuries with similar maturity.

will also issue 10-year notes and 30-year securities at a premium, the report said.

It added the proposed pricing is also higher than neighbour Qatar's bonds which offer a similar maturity.

Christopher Dembik, global head of macroeconomic research at France's Saxo Bank, told AFP the kingdom's offer "is going to arouse strong interest on the part of investors", and could be four or five times oversubscribed.

He said investors are desperately looking for yield, and the Saudi offer "will be certainly slightly above that of its neighbours because of its less favourable sovereign debt rating and a recent global trend towards higher sovereign rates," he said.

has already issued domestic bonds but that has led to a tightening of bank liquidity, according to Patrick Dennis, lead Middle East economist at Oxford Economics in London.

"So that's the main reason why they're now borrowing overseas," he told AFP.

Saudi banks' loan-to-deposit ratio rose for the fifth consecutive month in August, reaching 90.8 per cent, because of faster growth in credit relative to deposits, Riyadh's Jadwa Investment said in a report this month.

Borrowing abroad also reduces the drain on the kingdom's foreign reserves, Dennis said.

Official data show those reserves declined to USD 562 billion in August from USD 732 billion at the end of 2014.

The reserves remain very large but their rapid drawdown shows a need for diversified funding, Dennis said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard