According to sources, the Government of Saudi Arabia appointed JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. to arrange its first international bond sale of atleast $10bn.
The banks would act as the global coordinators on the issue and additional banks would be added later as joint lead arrangers and book-runners on the deal.
Previously in April 2016, the kingdom had issued a $10bn loan, its first in 15 years from a group of U.S., European, Japanese and Chinese banks.
Saudi Arabia plans to engage with bankers in Riyadh next week as part of its plan to launch its debut international bond of about $15bn as early as July 2016.
The Kingdom’s ministry of finance and a newly-formed debt management office would meet lenders on 6 – 7 June to hear proposals on how to organise the cash-strapped government’s first dollar-denominated bond.
Banks expected to take part include the Bank of Tokyo-Mitsubishi, HSBC and JPMorgan Chase, which were lead lenders on the kingdom’s $10bn loan in April 2016. Others thought likely to take part in the talks include BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley.
Bankers involved state that the current issuance could comprise of 30-year bonds and the Kingdom could follow it up with further issuances later in 2016 and, potentially, one in 2017.
According to HSBC Holdings plc, nations of the Gulf Cooperation Council (GCC) may face some difficulty in refinancing $94bn worth of debt by 2018, after being impacted by falling crude oil prices, slowing growth, rising rates and rating downgrades.
GCC countries, dominated by United Arab Emirates and Qatar, face $52bn of bonds and $42bn of syndicated loans maturing in the next two years. These countries also have a cumulative fiscal and current account deficit of $395bn over the period. Further, Gulf nations have a total of $610bn of FX-denominated debt and syndicated loans outstanding currently.
HSBC is confident that these nations would be able to tackle the issues of maturing debt and fiscal deficits through a raft of issuances of sovereign debt in the near-term.