Riyadh raises US$12.5b from 2nd sale

DUBAI: Saudi Arabia raised US$12.5 billion (RM52.8 billion) from its second dollar bond sale this year as the kingdom bolsters its finances amid an economic overhaul.

The government sold US$3 billion of long five-year notes, US$5 billion of the 10-year tranche and US$4.5 billion of the 30-year offering, said sources. Investors submitted about US$40 billion in bids, they said.

Long five-year notes were priced at 110 basis points over United States Treasuries 10-year tranche at 145 basis points 30year bonds at 180 basis points

The world’s biggest oil exporter returned to the dollar-bond market as investment-grade borrowing costs relative to US Treasuries remained historically cheap.

The kingdom raised US$9 billion from the sale of Islamic bonds in April to help bridge a budget deficit, forecast at 198 billion riyals (RM224 billion) this year, or 7.7 per cent of economic output.

It raised 37 billion riyals in the past three months from domestic debt sales.

Saudi Arabia was implementing a transformation plan aimed at weaning the economy off oil.

As part of these efforts, the government plans to create the world’s largest sovereign fund and sell hundreds of state assets, including Saudi Arabian Oil Co as well as stakes in the stock exchange, football clubs and flour mills. Bloomberg