9/11 suit delays Saudi bond

Saudi Arabia’s first international bond may be delayed by a U.S. vote on legislation that would allow the families of 9/11 victims to sue the Arab country, Bloomberg reported today.

A Senate vote to override President Barack Obama’s veto of the legislation on Wednesday could cause some investors to balk at the issue, Bloomberg said.

The news could explain delays in the launch of the bond which bankers said would happen at the end of September following the Eid al-Adha break. Bankers were expecting at least $10bn worth of bonds to have  been offered to international banks in the largest-ever Middle East sovereign borrowing in October.

The Saudi Arabian government is recording an unprecedented budget deficit due to lower oil prices. It has been financing the deficit by drawing down on international reserves, which are down by more than $150bn since the summer of 2014, and domestic bonds sales. More than $20bn worth of government bonds has been sold to local banks since the start of the year. This has led to tightening liquidity in the Saudi market and higher interest rates.

The Saudi Arabian Monetary Agency (Sama) has announced it plans to place about $5bn worth of government-related deposits with local banks.