Saudi Turns To Debt Market

The Saudi Ministry of Finance has this week returned to the domestic debt market by issuing development bonds worth SR20bn ($5.3bn) to be allocated to several commercial banks, in a bid to partly fund its rising budget deficit caused by falling oil prices. The bonds were issued with three maturities – five years at a yield of 1.92%; seven years at 2.34%; and ten years at 2.65%.

For the first time since 2007, the ministry in July issued development bonds worth SR15bn which were exclusively sold to local government entities. Announcing the issue, Governor of the Saudi Arabian Monetary Agency (SAMA) Fahd al-Mubarak said that the government intends to return to the domestic bond market for additional funds to cover its larger than expected 2015 budget deficit (MEES, 17 July). The latter, projected at SR145bn in the budget, is expected to rise to SR400bn ($107bn), according to MEES estimates, and to SR560bn, according to the IMF. (CONTINUED - 305 WORDS)