Saudi Arabia to raise around $31bn in debt this year

State-owned Aramco is expected to issue bonds soon. (AFP/File)
Updated 31 March 2019

Saudi Arabia to raise around $31bn in debt this year

  • Saudi Arabia’s debts have increased recently after drop in oil prices
  • Saudi Aramco is expected to issue its first international market bonds in the coming days

DUBAI: Saudi Arabia plans to issue $31.5 billion in debt this year to help finance the national budget deficit, the country’s Debt Management Office (DMO), part of the ministry of finance, said.
Saudi Arabia has borrowed extensively over the past few years to refill state coffers depleted by a drop in oil prices.
At the end of 2018, it had around $150 billion in outstanding government debt, 54 percent of which was in local currency and the rest denominated in US dollars.
The kingdom issued $7.5 billion in international bonds in January. It said its foreign funding this year “would be positioned in a way in which (Saudi Arabia) could secure most of its funding in the first quarter,” to reduce exposure to market risks and to allow Saudi government-related issuers to tap the debt markets.
The statement comes a few days before Saudi Aramco, the state-owned oil giant, is expected to issue its first bonds in the international markets.
Saudi Arabia’s deficit funding requirements for this year are estimated at $35 billion, which will be funded with an approximate net debt issuance of $31.5 billion, while the rest will come from government deposits at the central bank, the DMO statement said.
By the end of 2019, Saudi Arabia plans to have around $181 billion in outstanding debt, corresponding to 21.7 percent of gross domestic product.
The DMO said this year it would try to “contain” the government’s outstanding debt exposure to interest rate risk by reducing the percentage of floating-rate instruments in its portfolio.
At the end of 2018, 73 percent of Saudi debt issues had a fixed rate and 27 percent had a floating rate. By the end of 2019, the government wants to increase fixed-rate debt to 78 percent of its portfolio.


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.