Saudi Arabia Attempts to Boost Finances Amid Plunging Oil Prices
Last updated on September 19th, 2020
Disagreements over oil price between Saudi Arabia and Russia, along with the outbreak of COVID-19, has turned the Middle East region quite unstable.
Saudi Arabia, world’s largest oil producer, is now marketing a dollar debt offering 5.5-, 10.5-, and 40-year notes, joining the ranks of other Gulf States that recently sold bonds after the COVID-19 pandemic prompted shutdowns and oil prices plummeted. Meanwhile, the debt sales offered by Qatar and Abu Dhabi received strong response from investors. Saudi Arabia raised $5 billion in January via offshore issuance.
Mohammed Al-Jadaan, the Kingdom’s minister of finance, said they may raise an additional $4 billion in international bonds this year. Successful dollar note sales by Indonesia last week and by Malaysian oil giant Petroliam Nasional Bhd this week indicate strong investor appetite for highly-rated issuers.
Many investors are showing interest and are responding to debt sales being marketed by Middle East nations. A huge amount of dollar bond sales has been recorded in recent weeks as borrowers build up cash piles amid the pandemic.
Qatar has raised $10 billion from a Eurobond so far, attracting $45 billion of orders. The world’s largest exporter of liquefied natural gas has offered a premium over its existing bonds, which attracted demand from global investors, while Dubai Financial Market (DFM) index gained 3.5 percent (62 points) to 1,830, and Abu Dhabi Securities Exchange (ADX) rose 6.4 percent to 4,113 points. The rise on ADX comes after Abu Dhabi launched a $7 billion bond issue.
Israel, on the other hand, issued $5 billion including a 30-year portion paying 3.875 percent in the beginning of April.
Saudi Arabia is offering the 40-year tranche at about 5.15 percent. The longest tranche in its January deal was 35 years, which was priced at 3.84 percent.
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