Saudi Arabia Hires Goldman, JPMorgan, HSBC for Dollar Bond

  • Kingdom to hold series of investor calls starting Monday
  • Sale of long five, 10, 30-year 144A/RegS securities to follow

Saudi Arabia will hold calls with fixed-income investors starting Monday as the world’s biggest oil exporter seeks to sell dollar bonds for the second time this year.

The kingdom mandated Goldman Sachs Group Inc., GIB Capital, HSBC Holdings Plc, JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group Inc. as joint lead managers and bookrunners to organize the calls, according to two people familiar with the matter. A sale of 144a/ RegS bonds with maturities of more than five, 10 and 30 years will follow subject to market conditions, they said.

The offering comes as the cost to insure the country’s bonds fell this month to a two-year low, according to data provider CMA. Five-year credit default swaps declined to 81 basis points on Sept. 14.

Saudi Arabia raised $9 billion from the sale of five- and 10-year Islamic bonds in April to help bridge a budget deficit, forecast at 198 billion riyals ($53 billion) this year, or 7.7 percent of economic output. The kingdom has also raised 37 billion riyals from riyal-denominated domestic debt sales over the past three months. The biggest Arab economy is rated A1, the fifth-highest investment grade at Moody’s Investors Service.

Asset Sales

Saudi Arabia is implementing a transformation plan aimed at weaning the economy off oil. As part of these efforts, the government plans to create the world’s largest sovereign fund and sell hundreds of state assets, including Saudi Arabian Oil Co. as well as stakes in the stock exchange, football clubs and flour mills. The country is also considering a plan to phase out subsidies for gasoline and jet fuel in November at the latest, a person familiar with the matter said earlier this month.

Gulf Cooperation Council states, which includes the two biggest Arab economies of Saudi Arabia and the United Arab Emirates, have sold $51.6 billion of bonds so far this year as regional governments seek to bridge budget deficits brought on by low oil prices. Regional debt offerings reached a record $72 billion last year after Saudi Arabia raised $17.5 billion in its debut sale in October, the biggest ever issue by an emerging market nation.

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