Unjust deserts

10 January 2019 By George Hay Follow @gfhay

Riyadh’s successful $7.5 bln bond sale suggests investors have moved on from the Khashoggi murder. Yet long-dated Saudi debt trades at an implied discount to its rating. With the kingdom too optimistic about oil prices and facing peak demand, markets won’t always be so friendly.

This content is for Subscribers only

Context News

Saudi Arabia on Jan. 9 priced a $4 billion bond due to mature in April 2029 at 175 basis points over U.S. Treasuries and a $3.5 billion bond due to mature in January 2050 at a spread of 230 bps, IFR reported on Jan. 9.

That compares with initial price talk in the area of 200 bps and 250 bps respectively.

Investors placed orders exceeding $27 billion for the bonds, with a preference for the shorter-dated tranche.

The issue was arranged by BNP Paribas, Citigroup, HSBC, JPMorgan and NCB Capital Company.

Saudi Arabia is rated A1 by Moody's, A-plus by Fitch and A-minus by Standard & Poor’s.

The kingdom's Energy Minister Khalid al-Falih said on Jan. 9 he was confident that action to rein in output would bring the oil market into balance. Khalid al-Falih also said he would not rule out calling for further action.

Brent crude prices rose over 4 percent on Jan. 9 to above $61 per barrel. As of 0850 GMT on Jan. 10 they were trading at $60.70 a barrel.

Context News

That compares with initial price talk in the area of 200 bps and 250 bps respectively.

Investors placed orders exceeding $27 billion for the bonds, with a preference for the shorter-dated tranche.

The issue was arranged by BNP Paribas, Citigroup, HSBC, JPMorgan and NCB Capital Company.

Saudi Arabia is rated A1 by Moody's, A-plus by Fitch and A-minus by Standard & Poor’s.

Brent crude prices rose over 4 percent on Jan. 9 to above $61 per barrel. As of 0850 GMT on Jan. 10 they were trading at $60.70 a barrel.

Email a friend

Please complete the form below.

Required fields *