Foreign investors have flocked to buy the first bonds denominated in Saudi dollars since Jamal Khashoggi's death in Saudi Arabia, in a vote of confidence in the market after the country's reputation was damaged by the journalist's murder.
The Ministry of Finance in Riyadh announced Thursday that the order book for the sale of $ 7.5 billion of longer-term debt sales had reached $ 27.5 billion, the final price being that a few basis points above the corresponding secondary market returns.
Virtually all of the paper was purchased by foreign investors, with US-based buyers in particular taking 40% of bonds in 2029 and 45% of bonds in 2050. Middle East buyers did not obtain than 3% and 2% of bonds. questions, respectively.
Riyadh's shares among investors were affected by Khashoggi's assassination in the Saudi consulate in Istanbul in October, for which a definitive explanation has not yet been found, and the consequences humanitarian workers in his war in Yemen have become clearer.
But this week's selloff coincided with improving emerging market conditions, with yield compression in recent weeks, and Timothy Ash, senior emerging markets strategist at Bluebay Asset Management, said "opportunistic".
A second analyst said the impact of the Khashoggi affair faded.
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Hit by falling oil prices, Saudi Arabia has become one of the largest emerging market issuers. She has sold for $ 52 billion in international bonds since her debut in 2016. She plans to increase her borrowings this year alongside government spending.
The company began trading the bonds at approximately 40 basis points over its existing curve, but the spreads were gradually tightened and the final price of the $ 20 billion 2029 tranche was 15 to 20 points higher. base +25 basis points to the $ 20 billion tranche.
"It's a wise choice because risky assets are in fashion – 2019 has gone wild and investors want to use their money," said Wednesday Philipp Good, general manager and chief of the portfolio management at Fisch Asset Management.
Sergey Dergachev, functional head of emerging market debt and portfolio manager at Union Investment in Germany, said he thought investors had relegated the Khashoggi deal to the background, "especially since the reshuffle important governmental action two weeks ago ".
The sale – organized by BNP Paribas, Citi, HSBC, JPMorgan and NCB Capital – was also the first of this year by a borrower from the Gulf and comes at the time of the resumption of crude prices.
The leading oil exporter, Saudi Arabia, announced Wednesday a slight increase in its crude oil reserves after their independent audit.
"When you issue for the first time or among the first in early January, investors have cash balances to use," said Dergachev.
Saudi Arabia's public debt amounted to 560 billion riyals ($ 150 billion), or 19.1 percent of GDP in 2018, and the budget provides for an increase to 678 billion riyals or 21 million yuan. , 7% of GDP this year.
The country is ranked A1 by Moody's and A + by Fitch.
($ 1 = 3,7511 riyals)
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