Saudi Arabia has summoned bankers to meetings in Riyadh next week as the oil exporter seeks to launch its debut international bond of about $15 billion as early as July.
Bankers briefed on the plans said that the ministry of finance and a newly-formed debt management office would be hosting a “beauty parade” of lenders on June 6-7 to hear proposals on how to organize the cash-strapped government’s first dollar-denominated bond, CNBC reported.
Banks expected to take part include the Bank of Tokyo-Mitsubishi, HSBC and JPMorgan Chase, which were lead lenders on the kingdom’s $10 billion loan in April. Others thought likely to take part in the talks include BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley.
Riyadh could shortlist lead and second-tier arrangers as early as mid-June, one of the bankers said. The planned issuance, which could come as early as July, will include several tenors up to 30 years in maturity and would probably be followed by a further bond later this year and potentially another one next year, he said.
Growth in the country has slowed to about 1% of gross domestic product as the government has been forced to slash spending and deplete fiscal reserves to deal with the yawning budget deficit.
The unprecedented step of borrowing on international capital markets, as well as reflecting a stark fiscal crisis, is also part of a broader economic plan to diversify the economy by boosting the private sector and raising non-oil revenue. Although oil prices have recently risen to $50 per barrel from a low of about $27 in January, they are half the level they were in September 2014.
