Saudi Arabia expected to raise $17.5bn

 19 Oct 2016 - 22:54


LONDON: Saudi Arabia could issue the biggest bond deal in emerging markets history with its triple-tranche transaction.
The GCC sovereign has yet to finalise the size after tightening pricing on its offering of five, 10 and 30-year bonds. But it has guided investors to “expect a total deal size of up to $17.5bn.”
If that is the final size, it would beat the $16.5bn that Argentina raised earlier this year. Much will depend on how sticky demand is as Saudi Arabia seeks to potentially tighten pricing further. The deal has generated a total book of about $67bn, not far off the $69bn Argentina got.  But some investors may reduce or pull their orders if they feel final pricing makes the bonds unattractive. Investors have mixed views about the latest levels, which saw pricing tightened by 20bp on the five and 30-year notes and by 15bp on the 10-year tranche. Guidance on the five-year notes is now 140bp over Treasuries (plus or minus 5bp). The 10-year is at plus 170bp (plus or minus 5bp), and the 30-year at plus 215bp area (plus or minus 5bp).
At initial price thoughts, Saudi was offering about a 50bp premium over its higher-rated regional peer.