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With oil prices 70% down on their 2014 peak, GCC member states Saudi Arabia and Bahrain are reported to be considering tapping global markets to make up for loss of oil revenue.
Saudi Arabia, which currently enjoys adequate fiscal buffers, is not in a great hurry to hit the bond market. The kingdom has so far managed to fund public spending by borrowing internally and drawing on its sizable reserves which were $616bn at end-2015, down from $732bn at end-2014, according to SAMA statistics. Credit investors say that the size and rate of Saudi Arabia’s first issue of international bonds will depend on three parameters: the price of oil, Saudi financial reserves, and market volatility, the FT reported this week. Saudi Arabia is projecting a budget deficit of SR326bn ($87bn) in 2016.
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