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.


Dubai property developer Damac on hunt for land in Saudi Arabia

Hussain Sajwani
Updated 18 March 2019
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Dubai property developer Damac on hunt for land in Saudi Arabia

  • Brexit a “concern” for UK property market says Sajwani
  • Developer mulls investing “up to £500 million” on London project

LONDON: The Dubai-listed developer Damac says it is scouting for additional plots of land in Saudi Arabia, both in established cities and the Kingdom’s emerging giga-projects such as Neom.
Hussain Sajwani, chairman of Damac Properties, also said the company would look to invest up to £500 million ($660 million) on a second development in the UK, and that it is on track to deliver a record 7,000 or more units this year.
Amid a slowing property market in Dubai, Damac’s base, the developer is eying Saudi Arabia as a potential ground for expansion for its high-spec residential projects.
Damac has one development in Jeddah, and a twin-tower project in Riyadh — and Sajwani said it is looking for additional plots in the Kingdom.
“It’s a big market. It is changing, it is opening up, so we see a potential there … We are looking,” he said.
“In the Middle East, Saudi Arabia is the biggest economy … They have some very ambitious projects, like the Neom city and other large projects. We’re watching those and studying them very carefully.”
The $500 billion Neom project, which was announced in 2017, is set to be a huge economic zone with residential, commercial and tourist facilities on the Red Sea coast.
Sajwani said doing business in Saudi Arabia was “a bit more difficult or complicated” that the UAE, but said the country is opening up, citing moves to allow women to drive and reopen cinemas.
He was speaking to Arab News in Damac’s London sales office, opposite the Harrods department store in Knightsbridge. The office, kitted out in plush Versace furnishings, is selling units at Damac’s first development in the UK, the Damac Tower Nine Elms London.
The 50-storey development is in a new urban district south of the River Thames, which is also home to the US Embassy and the famous Battersea Power Station, which is being redeveloped as a residential and commercial property.
Work on Damac's tower is underway and is due to complete in late 2020 or early 2021, Sajwani said.
“We have sold more than 60 percent of the project,” he said. “It’s very mixed, we have (buyers) from the UK, from Asia, the Middle East.”
Damac’s first London project was launched in 2015, the year before the referendum on the UK exiting the EU — the result of which has had a knock-on effect on the London property market.
“Definitely Brexit has cause a lot of concern, people are not clear where the situation will go. Overall, the market has suffered because of Brexit,” Sajwani said.
“It’s going to be difficult for the coming two years at least … unless (the UK decides) to stay in the EU.”
Despite the ongoing uncertainty over Brexit, Sajwani said Damac was looking for additional plots of land in London, both in the “golden triangle” — the pricey areas of Mayfair, Belgravia and Knightsbridge, which are popular with Gulf investors — and new residential districts like Nine Elms.
Sajwani is considering an investment of “up to £500 million” on a new project in the UK capital.
“We are looking aggressively, and spending a lot of time … finding other opportunities,” he said. “Our appetite for London is there.”
Damac is also considering other international property markets for expansion, including parts of Europe and North American cities like Toronto, Boston, New York and Miami, Sajwani said.
The international drive by Damac comes, however, amid a tough property market in the developer’s home market of Dubai.
Damac in February reported that its 2018 profits fell by nearly 60 percent, with its fourth-quarter profit tumbling by 87 percent, according to Reuters calculations.
Sajwani — whose company attracted headlines for its partnership with the Trump Organization for two golf courses in Dubai — does not see any immediate recovery in the emirate’s property market, or Damac’s financial results.
“(With) the market being soft, prices being under pressure, we are part of the market — we are not going to do better than last year,” he said. “This year and next year are going to be difficult years. But it’s a great opportunity for the buyers.”
But the developer said Dubai was “very strong fundamentally,” citing factors like its advanced infrastructure, safety and security, and low taxes.
In 2018, Damac delivered over 4,100 units — a record for the company — and this year, despite the difficult market, it plans to hand over even more.
“We’re expecting north of 7,000,” Sajwani said. “This year will be another record.”