Global bond sale plans hailed

JEDDAH: Economists see considerable benefits for the Kingdom from the government’s plans to issue at least $10 billion worth of bonds in early October in its first international bond sale.

Saudi Arabia’s low debt-to-GDP ratio provides it with ample room to grow its bond issuance program in a relatively lower rate environment, said John Sfakianakis, director of economic research at the Gulf Research Center.

“The issuance of sovereign bonds by Saudi Arabia are extremely important for its revenue diversification efforts,” he told Arab News.

The issuance of bonds will help reduce the deployment of foreign reserves, he said.

The move also helps Saudi Arabia to maintain a high reserve-to-GDP ratio which is crucial for its macroprudential health, Sfakianakis added.

Tamer El Zayat, a senior economist at the National Commercial Bank, commented: “International bonds will diversify funding sources while benefiting from curves globally.”

The economists were reacting to a Bloomberg report which stated that the Saudi government is expected to hold a roadshow for potential investors during the last week of September, and sell bonds the following month.

Citing sources, Bloomberg said that the exact timing and size of the sale may change, depending on market conditions. flattening yield

Proceeds are likely to be used to help finance Saudi Arabia’s economic reform plan.

Bloomberg reported in June that Citigroup, HSBC, and JP Morgan Chase & Co., were hired as global coordinators for the sale.

“Saudi Arabia decided to resort to the international markets rather than issue these bonds in the Saudi market in order to be safe economically,” said Sami A. Al-Nwaisir, chairman, Al-Sami Holding Group.

Authorities have implemented aggressive and tough measures in running the country’s financial affairs and the budget, he pointed out.