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The Ras Tannura oil refinery in Dammam. Riyadh increased its debt ceiling to 50% of GDP from a previous 30% in March as it plans to increase borrowing to offset lower oil revenues and amid an economic downturn caused by the coronavirus outbreak. Image Credit: Rex Features

Dubai: Saudi Arabia started marketing on Wednesday a three-part dollar bond deal, a document showed, as the world’s biggest oil exporter seeks to replenish state coffers battered by low oil prices and expectations of lower output.

The kingdom, acting through the ministry of finance, is marketing five-and-a-half-year notes at around 315 basis points (bps) over U.S. Treasuries, 10-and-a-half-year bonds at around 325 bps over, 40-year notes at around 5.15%.

The size of the deal will depend on market appetite, but bankers and fund managers have said they expect a multi-billion dollar transaction.

Citi, Goldman Sachs, HSBC, Bank of China, Mizuho, MUFG, SMBC and Samba Capital have been hired to arrange the debt sale, which will be concluded later on Wednesday.

A spokesman for the Saudi ministry of finance did not immediately respond to a request for comment.

Riyadh increased its debt ceiling to 50% of GDP from a previous 30% in March as it plans to increase borrowing to offset lower oil revenues and amid an economic downturn caused by the coronavirus outbreak.

The planned bond issuance comes after neighbours Qatar and Abu Dhabi emirate successfully sold a combined $17 billion of bonds last week.

It also follows a historic deal on Sunday to cut oil output among major producers, which - while it may contribute to stabilising the oil market - is expected to put further pressure on Riyadh’s revenues this year.