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.


Oil prices inch up as US crude stocks drop, Iran sanctions weigh

Updated 4 min 49 sec ago
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Oil prices inch up as US crude stocks drop, Iran sanctions weigh

  • US crude inventories fell by 5.2 million barrels in the week to August 17 to 405.6 million barrels
  • ‘The Iran issue continues to occupy traders’ minds’

SEOUL: Oil markets rose on Wednesday on a drop in US crude inventories and a weaker dollar, while concerns about a potential shortfall in Iranian supply from November due to US sanctions also buoyed prices.
Brent crude oil futures were at $72.90 per barrel at 0653 GMT, up 27 cents, or 0.37 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 27 cents, or 0.41 percent, at $66.11 per barrel.
US crude inventories fell by 5.2 million barrels in the week to Aug. 17 to 405.6 million barrels, ahead of analyst forecasts for a fall of 1.5 million barrels, according to data from industry group the American Petroleum Institute.
Official data from the US Energy Information Administration (EIA) is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
“Investors are also confident that (official) inventories in the United States will decrease this week,” ANZ Bank said in a note.
Signs of slowing US crude output growth and a weaker US dollar also provided some support to oil prices, said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
The US dollar index against a basket of six major currencies eased on Wednesday to 95.211 after losing 0.7 percent the previous day, weighed down by US President Trump’s comments on monetary policy.
A weaker US dollar makes oil, which is priced in dollars, less expensive for buyers in other currencies.
The EIA cut its 2018 US crude production growth forecast on Aug. 7 to 10.68 million barrels per day (bpd) from 10.79 million bpd amid lower crude prices.
Concerns also remain over how much oil will be removed from global markets by renewed sanctions on Iran, despite worries that demand-growth could weaken amid a trade dispute between the United States and China, the world’s two biggest economies.
“The Iran issue continues to occupy traders’ minds,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC) and OPEC’s third-largest oil producer, said earlier this week no other OPEC member should be allowed to take over its share of oil exports.
Meanwhile, a Chinese trade delegation is in Washington to discuss the trade dispute with the US side. But signs of a thaw were unlikely as US President Donald Trump told Reuters in an interview on Monday that he did not expect much progress.