Saudi Arabia to focus on dollar, riyal bonds in 2018, says Al-Saif

Saudi Arabia will focus on issuing dollar and riyal-denominated debt this year, but will also consider bond sales in other currencies over the longer term, Reuters reported on Sunday, citing Fahad Al-Saif, the head of the Debt Management Office (DMO).

"At least for 2018, we are not going to deviate away from our dollar and local issuances," Al-Saif said, expecting the dollar yield curve would become more stable this year.

Issuances in other currencies are not currently part of the Kingdom's plan, but it is definitely part of its strategy.

When asked if Saudi Arabia might tap the euro-denominated debt market going forward, he said: "In the end it counts how fairly that particular market will be pricing Saudi, without adding any particular arbitrage into the pricing. I can confirm nothing at the moment."

The government has chosen banks for this year's first dollar bond issue, bankers said, adding that the sale could occur in the next few weeks.

Al-Saif said he hoped to conduct the issue in H1 2018.

Meanwhile, he ruled out the possibility that Riyadh would cut issues, as Brent oil is now trading at $67 a barrel, compared to just above $50 when Saudi Arabia issued its first foreign bond.

The Kingdom's public debt-to-gross domestic product ratio is low at 17 percent, below an anticipated level of 30 percent, he added.
 

Saudi Arabia will continue to issue bonds again from a market development (perspective) whether or not it requires the funding. There will be issues to ensure a very stable yield curve in hard currency.

Future issues of domestic government debt will also be listed, encouraging investment by non-bank investors such as mutual funds and insurers, Al-Saif added.

A total of SAR 204.4 billion worth of bonds began trading yesterday on the Saudi Stock Exchange (Tadawul), Argaam reported.