Saudi Arabia tests demand for Gulf debt with dollar bond

The kingdom has sold $52bn in international bonds since its debut in 2016



Saudi Arabia plans to issue US dollar-denominated bonds on Wednesday, targeting longer dated maturities in a test of international investor demand for the Gulf region.

Hit by a slump in oil prices, Saudi Arabia has become one of the biggest issuers across emerging markets, having sold $52bn in international bonds since its debut in 2016.

The kingdom, which plans to boost borrowing this year to back a planned increase in state spending, has started marketing bonds due in January 2029 and 2050, a document issued by one of the banks leading the deal showed on Wednesday.

The planned new issuance will be of benchmark size, meaning that each tranche will be at least $500m, and is expected to be priced later on Wednesday.

BNP Paribas, Citi, HSBC, JPMorgan and NCB Capital have been hired to arrange the debt sale.

Saudi Arabia, rated A1 by Moody’s and A+ by Fitch, started marketing the bonds due in 2029 with an initial price guidance in the area of 200 basis points over US Treasuries, and bonds due in January 2050 with an initial price guidance in the area of 250 basis points over the benchmark, the document showed.

Saudi Arabia’s public debt amounted to SAR560bn ($149bn) or 19.1 per cent of GDP in 2018. Its 2019 budget forecasts public debt will go up to SAR678bn or 21.7 per cent of GDP this year.