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Saudi Arabia to sell $75 billion dual-tranche international bonds

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BNP Paribas, Citi as well as HSBC, JPMorgan and NCB Capital have been hired to arrange the debt sale.

Thursday 10, January 2019

(Bloomberg) --Saudi Arabia is tapping international capital markets for the first time since the murder of Jamal Khashoggi rattled foreign investors.

The Kingdom, the biggest issuer of dollar bonds among developing nations over the past two years, will probably sell two benchmark-sized issues due 2029 and 2050, which will likely have a yield premium to similar-maturity debt. The offering is today’s business.

The kingdom is targeting a spread of about 200 basis points over Treasuries for debt maturing in April 2029, and around 250 basis points for securities due in January 2050, said a person familiar with the matter, who isn’t authorised to speak publicly and asked not to be identified

The spread on Saudi Arabia’s bond due in April 2028 was around 150 basis points over Treasuries of similar maturity. It was about 210 basis points for debt due April 2049

“The Saudis have opened the GCC primary markets for the year with a slight bang,” said Richard Segal, senior analyst at Manulife Asset Management in London. “The initial guidance is quite wide, that is 40 basis points over the outstanding for both, and these in turn have widened slightly.”

The Kingdom’s bonds fell after Khashoggi, was killed at the nation’s consulate in Istanbul in October, triggering outcries from leaders worldwide. The murder and oil’s slump into a bear market in the fourth quarter battered Saudi Arabia’s securities, making them among the worst performers in the Gulf.

Finance Minister Mohammed Al-Jadaan said last month the nation intends to issue around SAR 120 billion ($32 billion) of local and foreign-currency debt this year to help finance its deficit.

The Kingdom’s potential sale comes amid renewed appetite for riskier assets on speculation the US Federal Reserve will pause interest-rate increases this year.

Additionally, it also comes weeks before JPMorgan Chase begins including bonds from Saudi Arabia in its emerging-market bond indexes.

 

TAGS : Saudi bonds, Khashoggi, JPMorgan Chase , Dual-tranche

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