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Saudi Arabia’s Debut International Debt Issuance sees $50bn of Demand

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today 17 October 2016 GMT

UK and US Meetings Last Week


Roadshow began last week with Kingdom looking to raise between $10bn -$20bn – Not known if Sukuk or conventional debt will be used.


The Financial Times reported representatives from the Kingdom flew to the UK and US to lay groundwork for a number of deals including and IPO of Aramco. On the debt front the Kingdom is looking to issue in multiple maturities of five, 10 and 30 years. According to a banker familiar with the deal, there will be a rush to get some of the deals done before the US Presidential elections.


Sukuk or Not?


The structure of the debt deal remains unknown, but likely will be a conventional issuance given neighbouring Qatar and Abu Dhabi both issued using conventional bonds earlier this year, and if so the deal would be viewed very much as a missed opportunity for the Sukuk market.


The article reported the deal is seeing strong demand from Asian Insurers and demand may come in at the $50bn mark for an expected issuance of between $10bn and $20bn.


Saudi Arabia relies on oil for three-quarters of its income and prices have fallen to a 2003 low of about $28 a barrel in January. As a result, the kingdom slashed capital expenditure by more than 70 percent this year and has issued domestic debt to fund the largest budget shortfall among the world’s 20 biggest economies.


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