Saudi bond issue could be $20bn

Saudi Finance Minister Ibrahim Al-Assaf, pictured March 22 in Riyadh, says Saudi Arabia is ‘now working on issuing international bonds.’

Saudi Arabia’s Finance Minister Ibrahim al-Asaf

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Saudi Arabia’s planned international bond issue could be as big as $20bn, making it by far the largest single financial operation in Middle East history, bankers say.

Saudi Arabia’s Finance Minister Ibrahim al-Assaf confirned on Tuesday that the deal is doing ahead.

“We are now working on issuing international bonds,” Al-Assaf told reporters late Tuesday on the sidelines of a news conference in Jeddah, Saudi Arabia.

Al-Assaf said officials haven’t made a decision yet on the amount they plan to raise but noted it would be based on the needs of the government.

The appetite for Saudi Arabia’s debut international bond sale is likely to be high, especially after Qatar received strong demand for its $9 billion multi-tranche debt issue last month with some speculating that the kingdom could even raise as much as $20 billion, Bloomberg reported bankers as saying.

Al-Assaf said the kingdom’s financial strategy involved a balanced approach to local and international markets.

“We have issued more than 100 billion riyals [$26.66 billion] in local bonds and more will be issued, but our goal in local borrowing is not to compete with the private sector in borrowing. We wish to have enough liquidity for the private sector to borrow,” Al-Assaf said.

Saudi Arabia this week unveiled plans to reshape the kingdom’s oil-dependent economy. The so-called National Transformation Program offers details on how the ruling monarchy plans to achieve long-term economic change in an era of cheap oil. The generation of revenue from sources other than oil and the rolling back of subsidies are among the top goals.

Saudi Arabia this week said it aims to boost its credit rating with Moody’s Investors Service to Aa2 by 2020, after Moody’s and several other ratings firms downgraded the kingdom in recent months. Moody’s in May cut Saudi Arabia’s long-term issuer ratings to A1 from Aa3.