RIYADH: Investors are going wild for Saudi Arabian debt, with the country seeing “massive, massive demand” for its first ever international debt issuance, according to a report from the Financial Times. Saudi Arabia is expected to issue the first international debt in its history within the next couple of months, as it seeks to diversify government revenue streams away from oil while prices for the commodity remain depressed, and it seems as though investors are pretty keen on buying it up.
As it stands, there are no concrete details on exactly what the debt offering will look like, other than that it will be worth around $15 billion (£11.3 billion). More details are expected after the end of the Islamic holiday Eid-al-Adha, which has led to the closure of many government offices. News of the borrowing was first reported by Reuters in March, when it emerged that the kingdom had asked lenders to submit proposals for a US-dollar denominated loan. “We are seeing massive, massive demand,” one banker cited by the FT noted. Investors from Asia are the most interested, the same banker suggested, saying: “Asian banks are throwing around billion-dollar numbers.”
Appetite for the debt, which could be issued at some point in October, is so high that the kingdom has started to consider releasing a “full pipeline of bonds” to the markets, according to the FT, which cites “bankers briefed on the sale.” “Everyone is waiting to see how the appetite will turn out for the government, and at what price, which can then be used as a benchmark,” a second banker told the FT. “There should be some other issuance before the end of the year.”
The debt issuance is part of a plan from the kingdom’s ambitious young Deputy Crown Prince Mohammed bin Salman to transform its economy, and wean it off its “addiction to oil” in the next decade and a half. The so-called Vision 2030 initiative sets out a series of plans designed to move Saudi Arabia towards a more services-based economy and expand revenue streams from areas like entertainment and tourism.
