Saudi Arabia’s first international bond issuance of the year saw it raise USD 11.5 bn in USD-denominated notes, with the four-tranche offering carrying maturities of three, five, 10, and 30 years, Bloomberg reports, citing a source it says is familiar with the matter. The debt sale attracted as much as USD 29 bn in bids.

The bonds were priced at spreads tightened from their initial guidance, with the 30-year tranche — which drew in the lion’s share of demand — priced at 110 bps over US Treasuries. That’s 30 bps tighter than initial guidance. The final pricing of the other tranches was not disclosed.

Why this matters: The issuance comes just a few short days after Finance Minister Mohammed Al Jadaan approved the Kingdom’s borrowing plan for the year, which implies a targeted USD 14-17 bn of borrowing to cover its SAR 165 bn budget deficit. That range of borrowing would be below levels seen in past years; the lower end of the range would be the lowest bond volume since 2022, while hitting USD 17 bn in borrowing would still be below last year’s volume. Debt remains an important financial lever for Saudi Arabia to ensure consistent cashflow for gigaprojects.

An overshoot coming? Goldman Sachs Group forecasts that the Kingdom will issue USD 25 bn in international debt this year, Bloomberg says, suggesting that an overshoot of debt targets could be in the cards.

Background: The Kingdom also tapped bank financing in the first move under the government’s “deficit by design” phase earlier this week as the National Debt Management Center lined up a USD 13 bn (SAR 48.8 bn), seven-year syndicated loan to fund utility and infrastructure projects.

(** Tap or click the headline above to read this story with all of the links to our background and outside sources.)

Tags: