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

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.


Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

Updated 15 min 50 sec ago

Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

  • Growing pressure to crack down on Chinese companies that avail themselves of US capital markets but do not comply with rules
WASHINGTON: Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.
The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.
“We are simply leveling the playing field, holding Chinese firms listed in the US to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.
The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.”
The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.
A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.
China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation — they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.
The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.
The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.
The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.