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Saudi to Sell Bonds After Tapping on Foreign Debts

April 4
10:59 AM 2016

For the first time Saudi Arabia is considering to apply for an international debt as early as September and set up a bond program during an unaccustomed economic shake up. Saudi Arabia's of debt control arises as a new emergence on both national level and for the Kingdom's enterprises and businesses, according to senior banking leaders intend to attend the Euro money Saudi Arabia Conference in May.

In the past, Saudi's economy's one important strength includes its almost total absence of debt and had outstanding public debt that lies below 5% of gross domestic product considered as one of the best ratios in the world. Recent news however, reports indicate that it is already in talks for an international loan in its first important overseas borrowing for more than 10 years.  Standards & Poor's appraises that the Kingdom will seek up to $31 billion in 2016, as it strives to manage the fiscal deficit caused by the drop in oil prices, the Trade Arabia reports.

Saudi Arabia has been funding its deficiency in budget by selling local debt and depleting foreign reserves.  The central bank's net foreign assets have collapsed by more than 500 riyals ($133 billion) since the beginning of 2015 to 2.19 trillion riyals in February. The government will increase slash on subsidy and establish more levies as part of its plan to push non-oil revenue by $100 billion yearly by 2020.

The Minister of State Mohammad bin Abdulmalik Al-Sheikh said, "We want to prepare ourselves for the future to make sure that when we actually go to the markets and we really need the money, the markets, the investors and the financial institutions already know us," as being quoted by Bloomberg.

The 2016 Euromoney Saudi Arabia Conference is a special symposium that will be held in Riyadh from May 3 to 4 will review the future of the KSA debt market with a specific focus on the contingency of loans against bonds in the present period including the study of concerns over restricting liquidity. It will also serve a special banking CEO panel discussion that includes Abdulaziz A. Al-Helaissi, CEO of GIB, to give an insight from banks operating in the Kingdom, as reported by the Arab News.

Senior executives BNP Paribas, Clifford Chance, Saudi Electricity Company, International Monetary Fund and HSBC Saudi Arabia will participate in the discussion. The Euromoney Saudi Arabia Conference is the largest monetary conference in the Kingdom.

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