Home GCC Saudi Arabia Saudi Arabia returns to dollar-debt market to boost finances The price of Brent crude is still below what most of the region’s economies need to balance their budgets by Bloomberg January 27, 2021 Saudi Arabia sold a two-part dollar bond as countries in the Gulf Arab region raise cash buffers to weather low oil prices and the coronavirus pandemic. The world’s largest crude exporter priced $5bn in bonds on Tuesday, according to a person familiar with the matter, who asked not to be named. The $2.75bn 12-year notes were priced at 130 basis points over 10-year US Treasuries, compared with guidance of 140 basis points and initial price talk of 165, according to the person familiar The $2.25bn 40-year security were priced at 3.45 per cent, versus guidance in the 3.55 per cent area and initial price talk of 3.75 per cent The yield on its debt due 2060 was at 3.46 per cent at 4pm in New York Even before the kingdom’s offering, the Gulf Arab region was already seeing the busiest start to the year since 2019 for bond sales, with Oman and Bahrain raising a combined $5.25bn this month. The price of Brent crude is still below what most of the region’s economies need to balance their budgets. Saudi Arabia’s dollar bonds have lost 1 per cent since the start of year, making them the worst performer among Gulf Arab peers. “Coming into January, the entire Saudi curve has underperformed regional and EM peers in anticipation of today’s announcement,” said Angad Rajpal, head of fixed income at Emirates NBD Asset Management in Dubai. “It is a well-liked credit story underpinned by prudent response on public finances with a strong reform momentum.” Saudi Arabia will probably be the biggest emerging-market issuer of hard-currency debt this year with $14.5bn of bond sales, according to Morgan Stanley. The kingdom has a $5.5bn security maturing on October 26. Crown Prince Mohammed Bin Salman is seeking to get his economic master plan, known as Vision 2030, back on track following the fallout from the Covid-19 outbreak and lower oil prices. The programme includes boosting non-oil income and making the kingdom more attractive to foreign talent and investment. Still, economists have said that such austerity measures as spending cuts and a tripling of value-added tax will continue to weigh on growth. Saudi Arabia surprised investors by staying away from foreign capital markets in the second half of last year, opting to cover almost all of its budget deficit via domestic borrowing. The kingdom’s total outstanding debt stands at almost $228bn. The books are expected to close at the end of Tuesday. Goldman Sachs, HSBC Holdings and JPMorgan Chase & Co. are the global coordinators and BNP Paribas, Citigroup, Standard Chartered and NCB Capital are the passive joint lead managers. Tags Bonds Brent Budget Debt dollar finance Saudi Arabia 0 Comments You might also like UAE set to roll out 15% tax for global corporate giants Apple announces major retail expansion in Saudi Arabia Saudi Arabia cuts oil prices amid nascent demand recovery Abu Dhabi Finance Week 2024 opens today