Saudi raises size of 2016 syndicated loan to RM64b

By BLOOMBERG

DUBAI • Saudi Arabia said it’s increasing a US$10 billion (RM40 billion) syndicated loan by US$6 billion as the biggest Arab economy steps up borrowing to plug its budget deficit.

Existing holders and new banks showed “an exceptional response,” the debt management office of the Ministry of Finance said in an emailed statement last Friday. The new US$16 billion loan will be priced “at a margin representing a 30% reduction from levels set in 2016,” it said.

The previous five-year loan carried a spread of 120 basis points over London InterBank Offered Rate, according to data compiled by Bloomberg.

The world’s biggest oil exporter plans to borrow about US$31 billion this year to bridge an expected budget deficit of US$52 billion and fund growth plans after its economy shrank last year. Saudi Arabia raised about US$36 billion last year, including US$14 billion of domestic bonds and US$22 billion from international debt markets.

The improved terms are a “recognition of the strengthening of the Saudi economy,” Finance Minister Mohammed Al Jadaan said in the statement.

It is also a step in “achieving a prominent position for the kingdom in the international financial markets.”

The debt office is currently finalising the documentation process for the transaction and intends to close the financing by mid-March. A significant Islamic tranche will also be introduced in the deal, it said.

In 2016, the government borrowed the US$10 billion loan from banks including HSBC Holdings plc, JPMorgan Chase & Co and Bank of Tokyo Mitsubishi UFJ. It was the country’s first loan for at least 15 years.