The Strategist

Saudi Arabia sold bonds for $ 11 billion

04/12/2018 - 15:45

Saudi Arabia raised $ 11 billion in the sale of dollar bonds. The deal has become the largest for emerging markets this year, writes Bloomberg.

The Kingdom conducted the placement quickly, without a road show procedure, ahead of its neighbor and political rival, Qatar.

Qatar, boycotted by Saudi Arabia and other Persian Gulf countries, met with investors in the US and the UK this week before the possible placement of its bonds.

Saudi Arabia raised $ 4.5 billion from the sale of bonds with redemption in 2025 with a return of 140 basis points above US treasury bonds with a similar maturity.

In addition, the country sold bonds with redemption in 2030 with a spread of 175 b.p. for $ 3 billion, as well as bonds with redemption in 2049 with a spread of 210 b.p. by $ 3.5 billion.

Previously, Saudi Arabia set an initial price forecast for bonds with redemption in 2025 at around 170 b.p. compared with treasury bonds, for securities with redemption in 2030 - at around 200 b.p., for bonds with redemption in 2049 - at around 235 b.p.

This transaction eclipsed the sale of Argentina's bonds by $ 9 billion in January. Saudi Arabia has received applications for more than $ 50 billion.

The country has become one of the largest emitters in emerging markets, since the fall in oil prices prompted the kingdom to sell dollar bonds less than two years ago. Given the sale of securities this week, Saudi Arabia has attracted a total of $ 50 billion from the end of 2016, notes Bloomberg.

The Kingdom plans to borrow the equivalent of $ 31 billion in 2018 to overcome the expected budget deficit of $ 52 billion and finance growth plans after a reduction in GDP last year.