#SaudiArabia Returns to Dollar-Debt Market to Boost Finances - Bloomberg

Saudi Arabia Returns to Dollar-Debt Market to Boost Finances - Bloomberg

Saudi Arabia launched the sale of a two-part dollar bond as countries in the Gulf Arab region raise cash buffers to weather low oil prices and the coronavirus pandemic.

The world’s largest crude exporter plans to price $5 billion in bonds on Tuesday, according to a person familiar with the matter, who asked not to be named.

• The $2.75 billion 12-year notes launched at 130 basis points over 10-year U.S. Treasuries, compared with guidance of 140 basis points and initial price talk of 165 basis points, according to the person familiar
• The $2.25 billion 40-year security launched at 3.45%, versus guidance in the 3.55% area, compared with initial price talk of 3.75%
• The yield on its debt due 2060 was at 3.47% at 1 p.m. in New York

Even before the kingdom’s offering, the Gulf Arab region was already seeing the busiest start to the year since 2019 for bond sales, with Oman and Bahrain raising a combined $5.25 billion this month.

The price of Brent crude is still below what most of the region’s economies need to balance their budgets. Saudi Arabia’s dollar bonds have lost 1% since the start of year, making them the worst performer among Gulf Arab peers.

“Coming into January, the entire Saudi curve has underperformed regional and EM peers in anticipation of today’s announcement,” said Angad Rajpal, head of fixed income at Emirates NBD Asset Management in Dubai. “It is a well-liked credit story underpinned by prudent response on public finances with a strong reform momentum.”