Saudi Bond sale sets new record
Saudi Arabia has launched its first soverign bond issue and the response has been phenomenal. A mammoth $17.5bn worth of bonds have been purchased, eclipsing Argentina’s $16.5bn of earlier this year.
This comes as part of a broad based plan to shift their economy away from oil based revenues and to ‘future-proof’ the Kingdom. The bond sale bodes well for what is thought to be the world’s largest IPO, when Aramco, Saudi’s state-owned oil company, goes public (possibly in 2018).
According to The Financial Times, a UK newspaper, the multibillion-dollar order book ($67bn – close to Argentina’s $69bn) reflected increasing demand for debt issued by emerging markets, as interest rates in the developed world remain at historic lows. Argentina, Qatar, Turkey and Mexico have all sold large bond issues and the demand allowed Saudi Arabia to tighten its prices. The sale comprised three maturities of five-, 10- and 30-years offered at yields of about 2.60%, 3.41% and 4.63%, respectively — slightly below expectations.