Saudi Arabia plans first bonds in Ireland

Saudi Arabia is planning to list its first ever international bonds in Ireland, according to a report.
A London-based analyst told Arab News that the bond proceeds will help to both boost official net foreign assets.
James Reeve, deputy chief economist and assistant general manager at Samba Financial Group, told Arab News: “The bond offering has not been priced yet, but investors in London appear keen.”
The roadshow was well attended and feedback has been positive, he said.
“JASTA might have some impact on the pricing, but this is likely to be marginal. The bond proceeds will also add liquidity to the local market depending on how much of the offering they convert into riyals,” Reeve added.
Irish Times earlier said the Central Bank of Ireland has approved the prospectus for Saudi Arabia’s so-called global medium term note program, the most eagerly-anticipated debt sale to occur globally in years.
The document has also been published on the Irish Stock Exchange website.
The sale, first mooted almost a year ago, occurs against the backdrop of a slump in oil prices from $115 a barrel in 2014 to as low as $27.88 in January.
“There’s a view that oil markets are recovering, though some people believe prices will remain range-bound between $50 and $60, while others think it may move to $70,” Job Langbroek, an analyst with stockbrokers Davy in Dublin, was quoted as saying the media report.
He added that much will depend on how oil-producing nations finalize details of an agreement reach last month to rein in oil oversupply.
Saudi officials and their bankers started to meet potential investors on Wednesday as they prepared to sell at least $10 billion in bonds maturing in five, 10 and 30 years.
Citigroup, HSBC, JP Morgan have been hired to lead the deal, following intense competition among investment banks for the prized gig.
Bank of China, BNP Paribas, Deutsche Bank, Goldman Sachs, Morgan Stanley, Mitsubishi UFJ Financial Group and NCB Capital are also involved in the transaction.
Bankers would be hopeful that being involved in a successful deal would boost their chances being hired in 2018 to help with an initial public offering of Saudi Aramco, by far the world’s biggest company, which could be valued at over $2 trillion.
Patrick Dennis, lead Middle East economist at Oxford Economics in London, told AFP earlier that “demand is going to be very good, particularly from Asian investors.”
According to Irish Times, the bond prospectus said: “At Saudi Arabia’s current production levels of 10.2 million barrels per day on average in the year ended Dec. 31 2015, and without taking into consideration the discovery of additional reserves or developments in the oil production process, Saudi oil reserves of 266.5 billion barrels will last for around another 70 years.”
The country’s proven oil reserves account for almost 18 percent of the world’s total, according to OPEC.
“While the oil industry has historically dominated, and continues to be the largest part of, Saudi Arabia’s economy, for the past several years Saudi Arabia has been concentrating on the diversification of its economy,” the document said.
“These efforts have gained special importance in light of the onset in mid-2014 of the current low oil price environment.”

Source: Arab News