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Saudi Arabia plans bond binge

By NexChange
Capital Markets

SaudiArabia

The protracted slump in oil prices is forcing Saudi Arabia to turn to international investors. The decision follows issuance of domestic bonds in the summer to fund a rapidly deteriorating budget deficit, as the price of crude more than halved to $50 a barrel in less than a year .

"Saudi officials say the kingdom could increase debt levels to as much as 50% of gross domestic product within five years, up from a forecasted 6.7% this year and 17.3% in 2016," reports the Financial Times. (paywall)

"While banks have yet to receive any mandates, some lenders have already sent unsolicited proposals to guide the kingdom in approaching international markets," it adds.

Saudi's foreign reserves have plunged from last year’s high of $737 billion to a three-year low of $647 billion in September, as its attempts to put rival oil producers out of business by over-producing in a falling market failed dismally.

Now it intends to be a big issuer of international bonds just when yields are set to rise.

Photo: Al Jazeera English

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