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The Kingdom of Saudi Arabia intends to issue dollar bonds in two installments, with maturities of 12 and 40 years. The kingdom commissioned Goldman Sachs, HSBC and JP Morgan to organize the planned bond sale.
In this context, a document showed that Saudi Arabia had received subscription requests for more than 10 billion dollars in two types of bonds.
Al-Nefaiei Investment Company CEO Ali Al-Zahrani said in an interview with Al-Arabiya that the Corona pandemic has imposed new challenges on the Saudi public budget, explaining that the issuance of debt for periods of 12 and 40 years reflects the desire to achieve the Kingdom’s objectives, from debt issues, in relation to the domestic product, in addition to diversifying the financing conditions, according to the studied need. On the stock market, an increase in the number of business listings in the Saudi financial market is expected.
The Kingdom has set an initial indicative price of around 165 basis points on 10-year US Treasuries for the 12-year tranche and around 3.75% for the 40-year tranche, according to the document issued by one of the banks participating in the process.
Sources told Bloomberg on January 12 that the Kingdom of Saudi Arabia was preparing to return to global capital markets by selling bonds to raise around $ 5 billion to help cover financing needs. which increased with the fall in oil prices last year. .
Saudi Arabia expects its budget deficit to narrow this year after spending cuts reduced its financing needs.
Saudi Arabia surprised investors by turning away from foreign capital markets in the second half of last year and choosing to cover almost all of its budget deficit by borrowing in the domestic market. The total debt owed by the kingdom is approximately $ 228 billion.
Sales of bonds in emerging markets got off to a rapid start this year, with borrowing costs falling following an unprecedented central bank stimulus to support economies during the pandemic.
Gulf governments and businesses will issue around $ 120 billion in sukuk this year, according to Franklin Templeton. This compares to a record $ 126 billion last year.
Additionally, oil prices fell today, Tuesday, as the chances of a quick approval of another economic stimulus in the United States receded, while the high number of coronavirus infections raised concerns. doubts about the pace of any recovery in demand.
Brent fell 28 cents, or 0.5%, to $ 55.60 a barrel, while U.S. crude fell 26 cents, or 0.5%, to $ 52.51. Both benchmarks rose about 1% on Monday.
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