Saudi eyes $15bn of bond sales in 2016, post-Ramadan issue

The kingdom is said to have been encouraged by Qatar’s record issue last week

June 1, 2016

Saudi Arabia is considering the sale of as much as $15bn of bonds this year, including a $10bn issue that could come as soon as the end of Ramadan in July, according to reports.

Bloomberg cited sources as saying the kingdom had been encouraged by Qatar’s record issue last week, and was weighing the sale of at least $10bn in five-, 10- and 30-year bonds in July.

Talks were described as being at a preliminary stage and the Financial Times said the Ministry of Finance was lining up a “beauty parade” of lenders on June 6-7 to hear proposals on how to organise the bond.

Banks expected to take part include the lead lenders on the kingdom’s $10bn loan in April Bank of Tokyo-Mitsubishi, HSBC and JPMorgan Chase, according to the FT.

Others deemed likely to take part include BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley, with plans to shortlist lead and second-tier arrangers expected as early as mid-June.

Gulf Cooperation Council governments have been active in the bond market this year following a dip in oil revenues.

The Middle East’s largest ever sale, a $9bn bond from Qatar, attracted $23bn in orders last week and Abu Dhabi raised $5bn from the sale of five- and 10-year securities in April.

Read: Qatar completes Middle East’s largest ever bond sale

Dubai is also said to be preparing its own issue and Oman announced plans to issue bonds on Wednesday.

Saudi Arabia’s plans come at the kingdom embarks on a diversification drive led by Deputy Crown Prince Mohammed bin Salman.

The country posted a budget deficit of 15 per cent of GDP last year and recently had its credit rating reduce from Aa3 to A1 by Moody’s, reflecting a continued decline in economic conditions due to low oil prices.

Bloomberg reported yesterday that the kingdom had hired HSBC Holdings banker Fahad Al Saif to start a debt management office on an open-ended secondment from Saudi British Bank to manage its issuance plans.

Read: Saudi Arabia hires HSBC banker for bond sale – report

Bond sales from the Middle East and Africa have totaled a record $32bn this year, according to the news service.