off-the-wire

UPDATE 2-Saudi Arabia draws $17 bln demand for sukuk on debt market return

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds demand update, quotes from Monica Malik) By Yousef Saba DUBAI, May 15 (Reuters) - Saudi Arabia returned to the debt markets on Monday for the second time this year, drawing over $17 billion in demand for dollar Islamic bonds with tenors of six and 10 years, a bank document showed on Monday. Initial guidance for the six-year sukuk was around 110 basis points (bps) over U.S. Treasuries (UST) and around 135 bps over UST for the 10-year, a separate document on the sale showed. "Probably taking advantage of the market and front loading in case there is more pressure on the oil price," said Monica Malik, chief economist at Abu Dhabi Commercial Bank. "If the debt ceiling issue is resolved and market attention shifts back to inflation, the yield could be higher," she added, referring to a


standoff over raising the U.S. government's borrowing limit.


Citi, JPMorgan and Standard Chartered are global coordinators. Aljazira Capital, BNP Paribas and Goldman Sachs are also on the deal. The world's top oil exporter last tapped the public debt markets in January, raising $10 billion with three-tranche conventional bonds. High oil prices helped Saudi Arabia tilt to its first fiscal surplus since 2013 last year. It has said it expects a consecutive, albeit narrower, surplus in 2023, clouded by global economic concerns and an uncertain oil price outlook. "They are cutting oil production and a recession in the U.S. is likely - so this issue is a good example of prudent debt management," said Dino Kronfol, chief investment officer of global sukuk and MENA fixed income at Franklin Templeton. Saudi Arabia said it would trim oil production by 500,000 barrels per day from May, part of a surprise 1.16 mbpd cut announced by OPEC+.
(Reporting by Yousef Saba, Editing by Louise Heavens and Bernadette Baum)

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