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Thursday, 13 April 2017

Saudi debt binge amid oil gains eases liquidity drought | GulfNews.com

Saudi debt binge amid oil gains eases liquidity drought | GulfNews.com:

"Saudi Arabia’s repeat visits to international bond markets and a partial recovery in the price of oil, its biggest export, is easing a liquidity squeeze that was hampering its financial system. As the country finalised its first issue of dollar-denominated Islamic notes, six months after selling the biggest ever bond by an emerging market country, an interest rate used by Saudi banks to price loans stood at its lowest level in almost 14 months. That rate, known as Saibor, will probably fall further after the latest sukuk issue, according to Anita Yadav, head of fixed-income research at Emirates NBD PJSC, Dubai’s biggest bank. Saibor has been falling since reaching a seven-year peak of 2.386 per cent on October 17, immediately before the country’s debut dollar-bond sale, as oil export revenue dwindled, sending the state budget into deficit. Cost cutting by a government usually associated with vast reserves of petrodollars, and a drawing down of its bank deposits to prop up spending, prompted a cash squeeze in the economy, helping drive Saibor higher."



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