Saudi Arabia Eyes International Loan But Risks Credit Downgrade

Saudi Arabia is looking to tap the international debt market for a bank loan of $6-8bn. But given that its stretched finances have attracted the attention of the ratings agencies, Riyadh may face higher repayments.

Saudi Arabia repeatedly tapped the domestic sovereign debt market last year, raising a total of SR98bn ($26bn). It is expected to raise a further SR120mn ($32bn) in 2016, according to the latest update on the Saudi economy by Jadwa Investment.

Now, as part of its latest cash-raising plans, Riyadh appears to have asked lenders to submit proposals for a five-year dollar-denominated loan totaling $6-8bn, Reuters reports.

This would partially cover the 2016 budget deficit caused by the collapse in oil prices. The deficit for 2016 is projected at SR326bn ($87bn). This is somewhat lower than the estimated 2015 deficit of SR368bn ($98bn) in 2015 (MEES, 8 January). The 2016 figure is seemingly based on a $35/B oil price assumption. (CONTINUED - 738 WORDS)

DATA INSIDE THIS ARTICLE

chart SAMA Net Foreign Assets ($Bn)
table GCC Sovereign Ratings Downgrades*