Orders for Saudi bond said to exceed $50bn

Economy | Markets 10/19/2016, 1:15 PM
Orders for Saudi bond said to exceed $50bn

Saudi Arabia is due to initiate its first international bond sale on Wednesday, the orders for which are thought to exceed $50 billion, the Financial Times reported. The move comes as part of the kingdom's broader attempt to reduce its reliance on oil and redress its $87 billion budget deficit following the downturn in crude prices.

The price and the exact size of the dollar-denominated bond will be announced later today, but it is expected the offering will be split in three maturities, of five, 10 and 30 years. According to the initial price guidance, the yield on the five-year bond will be set at 160 basis points above the United States Treasuries, whereas the 10- and 30-year bonds will be underwritten at a premium of 185 and 235 basis points, respectively. The high demand for Riyadh's debt is consistent with investors' strong buying of other emerging market bonds, with some betting the offering will exceed Argentina's $16.5 billion bond sale earlier this year.

TeleTrader Newsroom / IB