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Saudi Arabia 1-Year Yield Rises Most on Record as Lending Grows

Saudi Arabia’s one-year local- currency borrowing costs rose the most on record at an auction today as accelerating loan growth in the largest Arab economy puts pressure on interest rates.

The average yield on one-year securities advanced five basis points, or 0.05 percentage point, the most since Bloomberg started tracking the data in March 2010, to a record 0.684 percent. Six-month notes yielded 0.555 percent, up four basis points, the data show. The kingdom only discloses the amounts raised at T-bill auctions on a monthly basis.

Saudi Arabia’s interest rates have climbed this year as government investment programs valued at more than $500 billion spurred lending. Bank loans to private businesses expanded 15 percent in October, the fastest pace in almost four years, according to central bank data. The three-month Saudi interbank offered rate, a benchmark used by banks to price loans, has gained 20 basis points this year to 0.98375 percent today, the highest since April 2009, data compiled by Bloomberg show.

The kingdom, which sells treasury bills at weekly auctions on Mondays, also issued three-month securities at an average yield of 0.47867 percent, up three basis points, the data show. The yield on 28-day T-bills added less than one basis point to 0.26273 percent, while that on seven-day notes was unchanged at 0.11212 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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