Saudi aims for its first foreign bond

DUBAI, Nov 10, (RTRS): Saudi Arabia aims to start selling bonds in the international market as soon as next year as it seeks new ways to cover a budget deficit caused by low oil prices, banking industry sources said on Tuesday.

The sources, who have been discussing the matter with officials in the central bank, the Saudi Arabian Monetary Agency (SAMA), said authorities had not yet finalised the plan but were making progress.

“If it’s going to be January, June or 2017, I’m not sure,” said a senior Gulf banker, declining to be named because of commercial sensitivities. “But it’s something that’s top of their minds.”

A Saudi commercial banker said bankers were pitching to both the finance ministry and SAMA.

“The ministry ... is borrowing but SAMA would be the issuer. In my opinion, I don’t think there will be a mandate til next year,” he said.

The Saudi central bank and finance ministry did not respond to requests for comment.

In July, the government began issuing about 20 billion riyals ($5.3 billion) of domestic bonds every month — its first sovereign bond sales since 2007 — to help fund its deficit, which has widened as the price of crude has shed more than half its value since June 2014.

The International Monetary Fund estimates the shortfall in the public accounts of the world’s biggest oil exporter is now running at over $100 billion annually.