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Saudi Arabia raises US$11b in biggest emerging market bond sale of 2018

[DUBAI] Saudi Arabia beat estranged neighbor Qatar to the bond market, raising US$11 billion in the biggest dollar sale by an emerging market sovereign this year.

The government sold US$4.5 billion worth of bonds due in 2025 at 140 basis points over similar-maturity US Treasuries, US$3 billion of notes maturing in 2030 at 175 basis points over the similar benchmark and US$3.5 billion of 2049 bonds at 210 basis points. Argentina raised US$9 billion in a three-tranche offering in January.

Saudi Arabia moved quickly to sell the bonds without a roadshow, while Qatar, which is being boycotted by the kingdom and other Gulf states, is meeting investors in the US and UK this week ahead of a possible sale. The kingdom also raised the funds as Crown Prince Mohammed bin Salman visits France after a three-week tour of the US.

"Saudi has re-gained the market's confidence," Shahzad Hasan, an emerging-market debt manager at Allianz Global Investors, which has US$612 billion under management, said ahead of the sale.

Market voices on:

"The resilience in oil is playing an important role in that and the crown prince's tour of the western economies was a positive factor as it sent the right message to foreign investors."

Biggest Issuer

Saudi Arabia has been one of the biggest issuers in emerging markets since a plunge in oil prices prompted the kingdom to sell dollar bonds less than two years ago. It raised US$21.5 billion in 2017 and US$17.5 billion in 2016, according to data compiled by Bloomberg.

The nation plans to borrow the equivalent of US$31 billion this year to bridge an expected budget deficit of US$52 billion and fund growth plans after its economy shrank last year. Last month, it increased a US$10 billion syndicated loan by US$6 billion.

Citigroup, GIB Capital, Goldman Sachs Group, HSBC Holdings and Morgan Stanley were joint global coordinators on the deal.

Bank of China, Industrial & Commercial Bank of China, JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group were joint leader managers.