Sunday, June 26, 2016

Saudi Arabia Taps Big Banks To Sell First Ever Global Bond Issue

DUBAI—Saudi Arabia has hired J.P. Morgan, HSBC and Citigroup to help sell its debut international bond, a person familiar with the matter said on Sunday, as the kingdom seeks to shore up its finances hurt by low oil prices.
Saudi Arabia has already secured a $10 billion loan from a consortium of international lenders in April and has sold debt to its domestic banks.
Saudi Arabia and its Persian Gulf neighbors—whose principal source of revenue stems from the sale of oil and gas—are increasingly borrowing from international markets as government finances are under strain due to a prolonged period of low energy prices.

Qatar last month sold $9 billion worth of bonds, while Oman recently raised $2.5 billion and the emirate of Abu Dhabi preceded them with a $5 billion bond sale.
All the GCC nations have been issuing bonds recently
The kingdom’s finance minister earlier this month said the country was preparing to tap international markets for the first time.

Fund managers and bankers have speculated Saudi Arabia’s bond size may exceed Qatar’s $9 billion, but the Saudi minister said then there was no decision on the final amount the country wished to raise.
“As of now, the size is undetermined, it will depend on market appetite,” said the person familiar with the matter. The Saudis have also not decided on the exact timing of the bond sale, the person said.

Saudi Arabia’s ministry of finance wasn’t immediately available to comment.

Sovereign borrowing in the Gulf in on track to reach a record level this year in stark contrast to the past decade when the region was awash with petrodollars that these countries used to generate rapid economic growth.
Saudi Arabia, one of the world’s leading oil exporters, ran a budget deficit of nearly $100 billion last year as a result of the decline in crude prices. The kingdom has since then outlined a broad economic reform package, that includes selling state assets and raising taxes, aimed at reducing its dependence on oil. Until now, the country has plugged its deficit by drawing down its foreign assets by about $165 billion since August 2014 and by selling domestic bonds.

Without those measures and at the current pace of spending, the International Monetary Fund warned that Saudi Arabia could run out of funds within five years. Ratings firms have also downgraded the kingdom’s debt rating in recent months.

1 comment:

  1. Bunch of MonkeysJune 26, 2016 at 5:03 PM

    Looks like there is some psychological pre-conditioning under way in Saudi Arabia to get the people used to the idea that their publicly owned energy assets will soon belong to someone else.

    My guess is that some Saudi Royal family connected bank is going to create a couple of trillion new digital dollars out of thin air and transfer the giant Saudi oil fields to a secret Saudi Royal family and/or Globalist bankster buyer if you ask me.

    When the financial collapse and reset comes the buyer's $USD trillions of debt will become worthless leaving them with basically free oil fields.

    Another wise business move or a perfect bankster crime.

    You pick.