Market Overview

Saudi Arabia's $17.5 Billion Bond Sale The Largest Ever By An Emerging Market Country

Saudi Arabia's $17.5 Billion Bond Sale The Largest Ever By An Emerging Market Country

Saudi Arabia sold $17.5 billion worth of bonds to international investors, marking the largest debt offering ever by an emerging market economy.

According to Gadfly's Marcus Ashworth, Saudi Arabia earned high scores in its first ever debt raise and set an appropriate tone not only for future debt raises but an initial public offering of its oil behemoth Saudi Aramco.

Related Link: Saudi Arabia Is Shopping For Bond Buyers But Won't Talk About Oil

Ashworth noted that more than 1,500 accounts put orders to buy Saudi Arabia's 30-year bond. In addition, the five-, 10- and 30-year bonds were all issued below par value and are already heading higher — a sign of some "generosity from a skillful debt capital markets deal team and a not-too-greedy issuer."

The banks that were tapped to oversee the sale process had orders for $67 billion so the offering could have been priced more aggressively but wasn't to leave the window open with investors for future deals.

Through 2020 the government is looking to raise $100 billion through bond offerings.

Meanwhile, investors are showing a tendency to overlook the extent of damage low oil prices inflicted on Saudi Arabia's economy, including a growing budget deficit. However, investors were also reassured by the government's commitment to overhaul its economy and reduce the economy's dependency on oil.

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Posted-In: Bloomberg GadflyNews Bonds Emerging Markets Commodities Global Markets Media Best of Benzinga


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