The volume of placement of foreign currency bonds Saudi Arabia may exceed $17 billion and become the largest among developing countries, according to sources Bloomberg. According to preliminary data, demand for the bonds exceeded $50 billion
Saudi Arabia has closed the bid book for debut dollar-denominated bonds. According to preliminary data cited by the Financial Times, the volume of bids exceeded $50 billion At the same time, the sources of Bloomberg claimthat the demand amounted to about $67 billion, the final amount and the offering price will be announced later on October 19.
Saudi Arabia expects to place three tranches of dollar-denominated bonds with maturity of five, ten and thirty years.
According to the expectations of Riyadh, Saudi yield bonds must exceed the yield on bonds with the same maturity. Writes the FT, the yield on five-year bonds should be above 160 b.p. ten-year — 185 b.p. thirty — 235 b.p. According to Bloomberg, which cites sources 140 b.p. 170 b.p. and 215 b.p. respectively.
According to FT, the size of the issue could reach $10-15 billion, making it the largest of the placements of countries in the Middle East and one of the largest among developing countries. The last record in the middle East established the Qatar, who in may held on the issue of the $9 billion Record among developing countries remains for Argentina, which in 2016 issued bonds for $16.5 billion.
Placement of state bonds takes place in the framework published in November 2015 of an ambitious plan to reduce the dependence of the economy of Saudi Arabia on oil prices. As specifies Bloomberg, amid a sharp reduction in budget revenues due to the fall in oil prices (for $115.1 per barrel in late June 2014 to $50,5 per barrel at the beginning of November 2015), the government was forced to reduce public expenditure, including various subsidies and salaries of civil servants. In 2015 the budget deficit in Saudi Arabia peaked in 1991, reaching $97 billion, or 15% of GDP.