Strong demand expected for Saudi global bond sale

JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. have been appointed to arrange the international bond sale, says a Bloomberg report.
Updated 26 June 2016
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Strong demand expected for Saudi global bond sale

RIYADH: Saudi Arabia appointed JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. to arrange its first international bond sale, people with knowledge of the matter said.

The banks are acting as global coordinators on the issue, according to the people, who asked not to be identified as the decision isn’t public.
More banks could be added later as joint lead arrangers and bookrunners on the deal, they said. Global coordinators have a key role in overseeing the deal while lead arrangers buy debt and sell it to other banks.
The decision on the mandates was made on Saturday night and the Kingdom will probably wait until after the summer before selling the bonds, two of the people said.
The Kingdom is preparing for a sale of at least $10 billion, separate people familiar said earlier this month.
HSBC, JPMorgan, Citi and Saudi Arabia’s Finance Ministry declined to comment.
Saudi Arabia is poised to join other countries from the GCC tapping foreign markets to plug budget deficits.
The Kingdom is shoring up its finances after crude prices slumped.
It plans to tap international debt markets as early as September, Minister of State Mohammed bin Abdul Malik Al-Sheikh said during a meeting between Bloomberg News and the Deputy Crown Prince Mohammed bin Salman in April.
“I expect the Saudi Arabia bond deal to be well received, albeit at a price,“  Anita Yadav, head of fixed-income research at Emirates NBD said by phone on Sunday.
“The hunt-for-yield in a world infected with negative rates will probably see good demand for a name like Saudi Arabia that has a strong credit rating and will likely offer attractive returns.”
In April, it sealed a $10 billion loan — its first in at least 15 years — from a group of US, European, Japanese and Chinese banks, people familiar with the matter said at the time.
The bond sale being considered now would probably come in five-, 10- and 30-year bonds once Ramadan ends next month, separate people with knowledge of the matter said earlier in June.
To cover a budget shortfall estimated at about $100 billion this year, Saudi Arabia has been selling local debt and drawing down foreign reserves as well as raising money on international capital markets.
It has also outlined an economic transformation plan that includes increasing government debt to 30 percent of economic output by 2020 from 7.7 percent.


Moody’s raises GDP growth forecasts for Saudi Arabian economy

Updated 18 October 2018
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Moody’s raises GDP growth forecasts for Saudi Arabian economy

  • The Moody’s report released on Wednesday maintained the Kingdom’s A1 rating
  • he agency expects higher oil production to boost the Saudi economy

LONDON: Moody’s has raised Saudi Arabia’s GDP growth forecast for 2018 to 2.5 percent from 1.3 percent as it maintains a “stable outlook” for the Saudi economy.
The ratings agency also increased its 2019 GDP forecast to 2.7 percent, well above the 1.5 percent previously predicted, the Kingdom’s Ministry of Finance said.
Moody’s numbers exceed the forecasts of the Saudi Arabian government for the 2019 budget announced in September.
The Moody’s report released on Wednesday maintained the Kingdom’s A1 rating.
The agency expects higher oil production to boost the economy, but also said developments in the non-oil sector will contribute to stronger GDP growth in the medium and long-term.
Moody’s said the Saudi government deficit for the 2018 and 2019 will hover between 3.5 percent and 3.6 percent, a far cry from its previous expectations of 5.8 percent and 5.2 percent.
Moody’s commended Saudi Arabia’s reasonable control of expenditure, even in the face of higher oil revenues.
“In addition to the moderate funding requirements, the government is able to access ample sources of liquidity, from both domestic or international capital markets and financial reserves. It is unlikely to face problems in financing the fiscal deficit,” the report said.
Last week, the IMF lifted its projections for economic growth in Saudi Arabia saying the Kingdom’s economy is expected to grow by 2.2 percent in 2018 and 2.4 percent next year, raising previous projections by 0.5 percent.