Saudi Arabia aims to be regional benchmark in global bond markets

Inside The Saudi Stock Exchange As Saudi Stocks GainVisitors stand and watch stock movements displayed on large video screens inside the Saudi Stock Exchange, also known as the Tadawul All Share Index in Riyadh, Saudi Arabia, on Monday, Nov.28, 2016. The Tadawul All Share Index advanced 26 percent since Saudi Arabias record-breaking bond sale last month, the most in the world during that period. Photographer: Simon Dawson/Bloomberg via Getty Images
Updated 03 May 2018
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Saudi Arabia aims to be regional benchmark in global bond markets

  • “The target is to become the regional benchmark and safe haven in fixed interest markets,” says head of debt management office
  • April's $11 billion bond issue five times oversubscribed

RIYADH: Saudi Arabia wants to be the “regional benchmark and safe haven” in global bond markets, according to Fahad Al-Saif, the president of the Ministry of Finance debt management office.

The Kingdom successfully raised $11 billion on international capital markets last month with an issue that was five times oversubscribed and in which 15 percent of investors were first time buyers of Saudi debt, Al-Saif said.

The capital raising was achieved without the need for a roadshow, he pointed out, in what he took as a sign that the Kingdom was now regarded as a “reliable and credible issuer” by international markets.

“The target is to become the regional benchmark and safe haven in fixed interest markets,” he said.

The debt raising is the third successive year Saudi Arabia has gone to the markets for multi-billion dollar sums, following the record breaking $17.5 billion debut sovereign bond in 2016 and $21.5 billion last year.

Both those rounds came toward the end of the year, whereas the most recent one came comparatively early in 2018. “We did not want to be tagged a final quarter issuer,” Al-Saif said.

But two bankers at the conference — who did not want to be named because they were currently working on bond sales in the Kingdom — said that the timing meant that Saudi Arabia could go back to the markets again this year.

“Saudi Arabia has become one of the biggest issuers in the world and it has a track record of proven quality. They (Saudi policymakers) might think it makes sense to go back to the markets while their reputation is flying high and interest rates are still comparatively low,” said one.

Faisal Qadri, head of debt capital markets for HSBC in Saudi Arabia, said: “Previously, Saudi Arabia was closed in terms of transparency and disclosure. Now they have produced a prospectus and are out there.”

Al-Saif said that he took encouragement from the kind of questions he was being asked by potential creditors: “They are asking normal questions about the economic progress of the Vision 2030 strategy and the fiscal balance targets. It is more technical inquiries and less focused on the oil price and geopolitics.”

He added that Saudi Arabia had the ability to issue a “super-long” bond of up to 100 years, but such a move seems unlikely at the moment.

“Are we able to issue 50 or 100 year bonds, yes. Are we able to issue in different currencies other than dollars, yes. Are we keen to take that step at the moment, I don’t think so,” he said.

Last month 45 government-linked securities were launched on the Tadawul financial market in a move aimed at deepening the domestic credit markets.


Turkey set to begin oil and gas drilling off Cyprus

Updated 38 min 32 sec ago
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Turkey set to begin oil and gas drilling off Cyprus

  • “In the coming days we will start drilling with two ships around Cyprus,” Turkish foreign minister said
  • Turkey and the Cypriot government have overlapping claims of jurisdiction in the eastern Mediterranean

ISTANBUL: Turkey will begin drilling for oil and gas near Cyprus in coming days, state-owned news agency Anadolu reported Foreign Minister Mevlut Cavusoglu saying on Thursday, a move that could stoke tensions with neighboring Cyprus and Greece.
Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.
“In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province.
“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.
Turkey launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.
Breakaway north Cyprus, which is supported by Turkey, says any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.
The island was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Countless peacemaking endeavours have failed, and offshore wealth has increasingly complicated peace negotiations, with Greek Cypriots saying the matter is not up for discussion.