Saudi Arabia is seeing “intense interest” in its first international bond sale of $15 billion and is considering further issuances given the current appetite, according to a report today in the Financial Times.
The Kingdom’s first international debt sale has generated so much interest from particularly from Asian investors that “the kingdom is weighing a full pipeline of bonds to follow a $15bn initial auction as early as October, according to bankers briefed on the sale,” the Financial Times reports.
Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman is in the midst of a lengthy visit to Asian nations, having visited Pakistan last week before heading to China and Japan this week, then returning to China for a meeting with member nations of the G20. The 11th G20 Summit will be held in Hangzhou, Zhejiang on September 4 and 5th.
Deputy Crown Prince Mohammed bin Salman arrived in China this week.
A potential U.S. interest rate hike next month is unlikely to change Saudi Arabia’s plans to raise funds from international banks. Record-low interest rates in mature economies has prompted investors to pour money into developing markets like Saudi Arabia, the FT notes.
However, as Bloomberg notes, they’re doing so with added protection. Investors are buying “the most amount of protection against a Saudi Arabian debt default in at least five years before the kingdom taps the international bond market,” according to data compiled by Bloomberg.
Last year, Saudi Arabia raised 98 billion riyals ($26.1 billion) from bond sales to domestic institutions. That figure is likely to rise to about 120 billion riyals ($34.6 billion) in 2016, Bloomberg reports, citing Saudi Fransi Capital.
