UPDATE 2-Saudi Arabia widens funding base with dual-tranche debut euro bond

Reuters

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01 July 2019 11:35

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By Davide Barbuscia

DUBAI, July 1 (Reuters) - Saudi Arabia has hired a group of banks including Goldman Sachs and Societe Generale to arrange a global investor call ahead of an issuance of euro-denominated bonds, its first in that currency, as the kingdom seeks to diversify its investor base.

Riyadh has become a regular debt issuer over the past few years to offset the impact of lower oil prices on its finances.

It has so far issued debt in Saudi riyal and U.S. dollars, but its planned debut in the euro-denominated markets shows it is targeting new funding sources for future issues.

Entering the euro market would allow the kingdom to tap different investors at any time, said a source familiar with the government’s plans, adding it would also indirectly strengthen trade links between Saudi Arabia and Europe.

Sources told Reuters last month that Saudi government representatives were planning to meet investors in London, Munich, Paris, Zurich, Milan, Amsterdam, The Hague and Frankfurt, ahead of the debt offering.

Goldman Sachs and Societe Generale have been hired as global coordinators and bookrunners for the potential new deal, while BNP Paribas, Morgan Stanley and Samba Capital have been mandated as lead managers and passive bookrunners, according to a document issued on Monday by one of the banks leading the potential new deal.

The kingdom is looking to issue bonds in tranches of eight and 20 years following the call, scheduled for Monday, the document said.

The Saudi Debt Management Office, part of the ministry of finance, declined to comment.

The deal, subject to market conditions, will be a Regulation S/144 A transaction, a format which allows the sale of securities to qualified institutional buyers in the United States.

The planned debt sale would be Riyadh’s second international bond isue this year. In January it raised $7.5 billion in bonds attracting over $27.5 billion in demand in what was seen by many as a vote of market confidence for the kingdom after its reputation was damaged by the murder of Saudi journalist Jamal Khashoggi last year. (Reporting by Davide Barbuscia; Editing by Raissa Kasolowsky and Hugh Lawson)

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