Saudi Arabia is borrowing $10 billion through a Eurobond sale on Tuesday.
(Bloomberg) —
Saudi Arabia is borrowing $10 billion through a Eurobond sale on Tuesday.
The kingdom had garnered over $35 billion of investor orders for the notes maturing in five, 10.5 and 30 years as it seeks to take advantage of cooling inflation that’s raised hopes of an easier rate hike trajectory. The order book excludes any joint lead-manager interest.
The notes will yield 110 and 140 basis points over Treasuries and 5.5 percentage points, respectively, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it.Â
The Federal Reserve may lean toward smaller interest-rate increases after wage growth cooled in December, another step down in its aggressive campaign of monetary tightening. Even before the kingdom’s offering, Gulf financial institution First Abu Dhabi Bank PJSC was able to chop the pricing on a dollar bond sale Monday, as it joined a global issuance blitz spurred by lower funding costs and reduced volatility.Â
Even so, debt sales so far this year from Gulf issuers are down about 27% to $772 million from the year-earlier period as borrowing costs are still elevated. Average spreads on dollar company bonds have eased back to about 130 basis points from an October peak, according to a Bloomberg index, yet that’s still well up on the 90 basis points issuers were able to lock in just a year ago.
Saudi Arabia expects to run a surplus of 16 billion riyals ($4.3 billion) in 2023, nearly double a previous estimate of 9 billion riyals, it said last month. The Kingdom last sold $5 billion in bonds and Islamic securities in October.
(Updates with deal size and pricing margin)
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