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Scandal-stricken Saudi Arabia make $7 billion bond sale

Saudi Arabia has reeled

Date of publication: 11 January, 2019

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Saudi Arabia on Wednesday made its first major sale of debts since drawing international outrage over the murder of journalist Jamal Khashoggi.

Saudi Arabia sold $7.5 billion of new bonds to international investors on Wednesday in deals set to be managed by several top western banks seemingly unperturbed by the kingdom's recent scandals.

BNP Paribas, JPMorgan, HSBC, Citigroup and NCB Capital led the sale that came less than three months after the shocking murder of Saudi dissident Jamal Khashoggi and amid mounting pressure on Riyadh over its military campaign in Yemen.

The dollar bonds sold on Wednesday, which are set for maturity in both 2029 and 2050, attracted $27bn of orders. The oil-rich kingdom will pay a yield of 4.48 per cent on the bonds maturing in 2029, and 5.328 per cent on the 2050 debt.

Under the leadership of 33-year-old Crown Prince Mohammed Bin Salman, Saudi Arabia is hoping to radically reorganise its economy and wean itself off dependency on oil sales.

The kingdom's budget for 2019 pledges to boost expenditure by seven percent, despite sliding oil prices forcing the Riyadh to adopt austerity measures to compensate.

King Salman said in December that the Saudi government expects revenue to increase by more than nine percent to hit $260 billion, leaving a projected deficit of $35 billion - less than previous years.

Non-oil revenues have increased in recent years, but the state continues to rely heavily on oil for its domestic and international spending.

Wednesday's tapping of funds from international investors are a positive sign for the kingdom, which has struggled to reassure business and political allies in the aftermath of the Khashoggi affair.

Khashoggi's killing, which took place in the Saudi consulate in Istanbul, led to a boycott of Crown Prince Mohammed's 'Davos in the Desert' business forum in Riyadh in October.

The ambitious young prince has been heavily linked to Khashoggi's murder, with both US and Turkish intelligence agencies reportedly concluding that the assassination order came from Prince Mohammed himself.

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