Kingdom starts roadshow for first global bond issue

11/10/2016 05:29 AST

Saudi Arabia will begin holding meeting on Tuesday with potential investors as it plans to issue its first international bonds, official media reported.

An analyst has told AFP the issue could be worth $15 billion, as the Kingdom tries to adjust its economy to cope with oil revenues which collapsed over the past two years.

Officials have “assigned a number of international and local investment banks to coordinate a series of meetings with bond instrument investors,” the Saudi Press Agency said.

“They will begin Tuesday October 11. In addition, these investment banks will be assigned to manage and organize the first international bonds denominated in US dollars.”

Finance Minister Ibrahim Al-Assaf has told Bloomberg News that a decision on the timing of the bond, and its amount, has not been made.

The bond could be worth $15 billion, Patrick Dennis, lead Middle East economist at Oxford Economics in London, told AFP last month.

“Demand is going to be very good, particularly from Asian investors,” he said. Saudi Arabia has already issued domestic bonds but that has led to a tightening of bank liquidity, Dennis said.

At the same time, the Kingdom has very little debt, leaving it room to borrow abroad and prevent a run-down of its foreign reserves, he added.

Official data show the foreign reserves declined from $732 billion in 2014 to $562 billion in August.

“So although very large still, they have fallen very rapidly in a relatively short period of time, so they do need to diversify their funding sources,” Dennis said.

Arab News