Saudi leads emerging market with $11B bond

dubai — Saudi Arabia beat estranged neighbour Qatar to the bond market, raising $11 billion in the biggest dollar sale by an emerging-market nation this year.

The kingdom moved quickly to sell the bonds without a road show, forcing Qatar, which is being boycotted by Saudi Arabia and other Gulf states, to play catchup. The smaller nation is meeting investors in the US and UK this week ahead of a possible offering and will hope to get a deal away despite its isolation.

“There was likely some strategic thinking in the timing of Saudi Arabia coming ahead of Qatar,” said Tim Ash, a senior emergingmarket strategist at BlueBay Asset Management in London. “Qatar might have to price accordingly to draw investors. They also want to demonstrate continued market access, after its spat with Saudi and other Gulf states.”

Saudi Arabia’s sale, which eclipsed Argentina’s $9 billion offering in January, received more than $50 billion in bids, including interest from joint lead managers, 3 people familiar with the deal said.

Qatar might have to price accordingly to draw investors Tim Ash, senior emerging-market strategist at BlueBay Asset Management

Saudi Arabia reduced the spread it was offering and still managed to sell the bonds, said Richard Segal, a senior analyst in London at Manulife Asset Management, which oversees $400 billion. “This still left a good deal of value on the table for investors,” he said.

The Saudi deal shouldn’t impact the pricing on Qatar’s upcoming bond, Segal said.

Saudi Arabia has been one of the biggest issuers in emerging markets since a drop in oil prices prompted the kingdom to sell dollar bonds less than 2 years ago. With this week’s offering, Saudi Arabia has raised a total of $50 billion since the end of 2016, according to data compiled by Bloomberg.

The kingdom plans to borrow the equivalent of $31 billion in 2018 to bridge an expected budget deficit of $52 billion and to fund growth plans. Last month, it increased a $10 billion syndicated loan by $6 billion. — Bloomberg