DUBAI: Saudi Arabia’s government will sell about 20 billion riyals ($5.3 billion) of domestic bonds to banks next Monday, the Maaal financial website quoted official sources as saying on Tuesday.
Since last August, the government has been selling about 20 billion riyals of domestic bonds to banks every month to fund a budget deficit caused by low oil prices.
In the last few months it has also started borrowing abroad.
It raised a $10 billion international loan last month and plans a US dollar bond issue in coming weeks or months.
This month’s domestic debt sale will comprise five-, seven- and 10-year bonds in fixed- and floating-rate tranches, Maaal said.
The fixed-rate bonds would be offered at 60-65 basis points above US Treasuries for the five-year tranche, 72-77 bps over for seven years and 85-90 bps over for 10 years.
The floating-rate bonds would be offered at 25 to 30 bps below the three-month Saudi interbank offered rate/sfor five years, 10 to 15 bps below for seven years and flat to 5 bps above for 10 years.
Saudi Arabia has been looking for ways to drive revenue in the country following the crash of the oil between 2014 and 2016, when oil fell from a high of $115 a barrel to a low near $28. Oil has since recovered to near $50.
The Saudi government has cut a number of energy subsidies, discussed the possibility of an income tax on expats, and planned the implementation of value added tax, which will be launched across the GCC in 2017.
The government has also launched economic reform plan called Saudi Vision 2030.
