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

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.


Latest Issued Sukuk