Saudi Arabia raises $11bn in biggest EM bond sale of 2018

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SOURCE: Arabian Business

Time: April 11, 2018

Saudi Arabia has been one of the biggest issuers in emerging markets since a plunge in oil prices

Saudi Arabia beat estranged neighbour Qatar to the bond market, raising $11 billion in the biggest dollar sale by an emerging market sovereign this year.

The government sold $4.5 billion worth of bonds due in 2025 at 140 basis points over similar-maturity US Treasuries, $3 billion of notes maturing in 2030 at 175 basis points over the similar benchmark and $3.5 billion of 2049 bonds at 210 basis points. Argentina raised $9 billion in a three-tranche offering in January.

Saudi Arabia moved quickly to sell the bonds without a roadshow, while Qatar, which is being boycotted by the kingdom and other Gulf states, is meeting investors in the US and UK this week ahead of a possible sale. The kingdom also raised the funds as Crown Prince Mohammed bin Salman visits France after a three-week tour of the US

“Saudi has re-gained the market’s confidence,” Shahzad Hasan, an emerging-market debt manager at Allianz Global Investors, which has $612 billion under management, said ahead of the sale.

“The resilience in oil is playing an important role in that and the crown prince’s tour of the western economies was a positive factor as it sent the right message to foreign investors.”

Biggest issuer

Saudi Arabia has been one of the biggest issuers in emerging markets since a plunge in oil prices prompted the kingdom to sell dollar bonds less than two years ago. It raised $21.5 billion in 2017 and $17.5 billion in 2016, according to data compiled by Bloomberg.

The nation plans to borrow the equivalent of $31 billion this year to bridge an expected budget deficit of $52 billion and fund growth plans after its economy shrank last year. Last month, it increased a $10 billion syndicated loan by $6 billion.

Citigroup Inc., GIB Capital, Goldman Sachs Group Inc., HSBC Holdings Plc and Morgan Stanley were joint global coordinators on the deal. Bank of China, Industrial & Commercial Bank of China Ltd., JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group were joint leader managers.

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