Saudi Arabia’s euro bond 3 times oversubscribed

The bond issuance was more than three times oversubscribed, with total orders in excess of $6.11bln

  
The signature of President of the European Central Bank (ECB) Mario Draghi is written upon an outsized specimen new 20 Euro banknote at the ECB headquarters in Frankfurt February 24, 2015. Image used for illustrative purpose.

The signature of President of the European Central Bank (ECB) Mario Draghi is written upon an outsized specimen new 20 Euro banknote at the ECB headquarters in Frankfurt February 24, 2015. Image used for illustrative purpose.

REUTERS/Ralph Orlowski
 
RIYADH: The Saudi National Debt Management Center (NDMC) has announced the receipt of subscriptions from investors for its second international issuance under the Kingdom’s Global Medium-Term Note Program in Euro.

The bond issuance was more than three times oversubscribed, with total orders in excess of 5 billion euros ($6.11 billion).

Saudi Arabia will issue a total of 1.5 billion euros in two tranches: 1 billion euros for three-year notes set to mature in 2024, and 500 million euros for nine-year notes scheduled to mature in 2030.

Saudi Minister of Finance and Acting Minister of Economy and Planning Mohammed Al-Jadaan, said that the euro-denominated issuance came within the framework of the NDMC’s efforts to secure the Kingdom’s financing needs in accordance with the objectives of the fiscal policy and public debt strategy.

He pointed out that the center took advantage of the opportunity to enter the euro market, the second largest after the US dollar market, by issuing debt instruments with negative returns, making it the largest tranche issued with a negative return outside the EU.

The minister noted that the high demand was an indication of the strength of Saudi Arabia’s ability to enter different markets without affecting long-term debt prices, as well as it being able to build strategic relationships with investors in different countries.

Al-Jadaan added that the NDMC sought to diversify its financing instruments across local and external markets.

Alternative government financing methods have recently been used as part of the Ministry of Finance’s plan to support the continuity and completion of major development projects in the Kingdom, in order to achieve the goals of the Vision 2030 reform plan, he said.

Dr. Saleh Al-Sultan, an economics writer and former chief economist at the Ministry of Finance, told Arab News that after the economic impact of the coronavirus disease (COVID-19) pandemic global investors were “looking to keep money safe as possible” and searching for safe-haven vehicles.

He added that the government was aiming to “diversify our sources of getting money in terms of countries and currencies” and that this also had a political aspect as it showed the US “that there are other important world currencies, not just dollar.”

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