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Here are the details of this news amid signs of rising interest rates of Saudi borrowings at 3%. Al-Jazeera Bond Analyst:
amid signs of rising interest in Saudi borrowings to 3%. The Saudi interest, which is the backbone of most business and personal loans, continued its record upward trend after SAMA raised the interest rate on l & # 39; 39; island. Double repurchase agreement this year. Mohammed al-Khneifar said the move led SAIBOR to 71 basis points, according to data released last Thursday. In other words, the average rate of increase in the proportion of Saibur was 11.8 basis points per month over the last six months. This has prompted Bloomberg economists to expect the Saudi interest to end this year with a rise of 3% and 3.75 by the end of 2019.
Corporate Advice
Khenifer said that these developments in the credit arena of Saudi Arabia) On corporate debts, most of which are valued at the changing interest rate of the Saipur movement, which leads to the erosion of some of the profits of these companies. The borrowing environment opens the door to finding appropriate ways to reduce the impact of higher financing costs on their profits. Pointing out that one of the solutions lies in the issuance of debt securities and are tariffed at fixed rates (whether they are denominated in riyal or dollar). He explained that variable rate loan companies should use hedging products for variable and fixed interest rate fluctuations (in order to codify the consequences of the erosion of profits due to the higher costs of the loan. debt service). At 2.61 basis points, while LIBOR stabilized at 2.34 basis points (the difference between the two continued to rise to 27 basis points, the historic Saipur and LIBOR average Establishing at 45 basis points, Due to the widening of the gap, the central bank was trying to balance between avoiding the pressure on the currency (and attaching it to the dollar) while supporting the growth of the Saudi economy without too much The critical period of the money market comes at a time when Saudi Arabia aspires to attract more financial flows for foreign investors to its stock market, which may hesitate to invest in case of foreign exchange risk
Sequence of events
The bonds in the "Island: On February 20 of this year, the SAIBOR became lower than the LIBOR, creating the negative margin between the two benefits ( 19 basis points). [5] On March 5, the SAM A decided to suspend the repo agreements for periods of seven days, 28 days and 90 days (called the window of long-term liquidity). However, this procedure did not work and the gap widened the following days until Cyber exceeded (2.01%) on March 14, exceeding the ceiling. repo (2%).
Given the concern that the widening of the negative difference To boost the capital outflows of the Kingdom, the central bank adopted, on March 15, its decision on "ribo and reverse repo" in a very unusual step and raising interest rates before the US central bank. The buyback rate has gone from 200 basis points to 225 basis points In theory, the new Saipur roof (the first of its kind in the last decade – was in February 2007). The resale agreement rate was raised by 150 basis points to 175 basis points. The move has narrowed the gap between the two benefits, but has not yet been closed. On March 22, Sama (via an interview with the Governor of Bloomberg) announced a new measure that he would not be able to do. The maturity of some SAMA deposits with local banks (which were filed in 2016 under pressure from the banking sector with liquidity) will not be extended. In other words, the central depots will be called to maturity. One of the objectives of this measure is to reduce the excess liquidity in the banking sector, which Sama wishes to help raise the proportion of SAIBOR above LIBOR.
On June 13, SAMA decided to raise the A base point to 200 basis points, and the repo rate rose from 225 to 250 basis points.
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– Banker specializing in the debt and credit markets and working for an international multilateral institution. ] – Twitter: @Mkhnifer
[email protected]
Corporate Advice
Khenifer said that these developments in the credit arena of Saudi Arabia) On corporate debts, most of which are valued at the changing interest rate of the Saipur movement, which leads to the erosion of some of the profits of these companies. The borrowing environment opens the door to finding appropriate ways to reduce the impact of higher financing costs on their profits. Pointing out that one of the solutions lies in the issuance of debt securities and are tariffed at fixed rates (whether they are denominated in riyal or dollar). He explained that variable rate loan companies should use hedging products for variable and fixed interest rate fluctuations (in order to codify the consequences of the erosion of profits due to the higher costs of the loan. debt service). At 2.61 basis points, while LIBOR stabilized at 2.34 basis points (the difference between the two continued to rise to 27 basis points, the historic Saipur and LIBOR average Establishing at 45 basis points, Due to the widening of the gap, the central bank was trying to balance between avoiding the pressure on the currency (and attaching it to the dollar) while supporting the growth of the Saudi economy without too much The critical period of the money market comes at a time when Saudi Arabia aspires to attract more financial flows for foreign investors to its stock market, which may hesitate to invest in case of foreign exchange risk
Sequence of events
The bonds in the "Island: On February 20 of this year, the SAIBOR became lower than the LIBOR, creating the negative margin between the two benefits ( 19 basis points). [5] On March 5, the SAM A decided to suspend the repo agreements for periods of seven days, 28 days and 90 days (called the window of long-term liquidity). However, this procedure did not work and the gap widened the following days until Cyber exceeded (2.01%) on March 14, exceeding the ceiling. repo (2%).
Given the concern that the widening of the negative difference To boost the capital outflows of the Kingdom, the central bank adopted, on March 15, its decision on "ribo and reverse repo" in a very unusual step and raising interest rates before the US central bank. The buyback rate has gone from 200 basis points to 225 basis points In theory, the new Saipur roof (the first of its kind in the last decade – was in February 2007). The resale agreement rate was raised by 150 basis points to 175 basis points. The move has narrowed the gap between the two benefits, but has not yet been closed. On March 22, Sama (via an interview with the Governor of Bloomberg) announced a new measure that he would not be able to do. The maturity of some SAMA deposits with local banks (which were filed in 2016 under pressure from the banking sector with liquidity) will not be extended. In other words, the central depots will be called to maturity. One of the objectives of this measure is to reduce the excess liquidity in the banking sector, which Sama wishes to help raise the proportion of SAIBOR above LIBOR.
On June 13, SAMA decided to raise the A base point to 200 basis points, and the repo rate rose from 225 to 250 basis points.
** **
– Banker specializing in the debt and credit markets and working for an international multilateral institution. ] – Twitter: @Mkhnifer
[email protected]
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