EM Bond Bonanza

EM Bond Bonanza

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  • Saudi Arabia has successfully sold $12 billion in bonds, marking its most substantial bond deal since 2017, in the midst of an unprecedented start to the year for emerging-market countries. This move contributes to the approximately $25 billion of bonds issued by developing nations since the beginning of the year, with Mexico leading the pack with a $7.5 billion offering. The Saudi deal represents over half of the fiscal deficit projected by the government for this year. Further, amidst a significant drop in US Treasury yields since October, many borrowers are seizing the opportunity to secure lower funding costs. Although the Federal Reserve is expected to cut interest rates later this year, potentially pushing yields even lower, such a move may take several months.

  • Saudi Arabia's bond offering included six-, 10-, and 30-year notes with yields of 4.89%, 5.13%, and 5.91%, respectively. Despite the challenging economic environment, investors demonstrated strong interest, placing around $30 billion in orders. Major banks, including Citigroup, JPMorgan Chase, HSBC Holdings, and Standard Chartered, managed the sale. Saudi Arabia, once anticipating fiscal surpluses until 2025, revised its outlook due to crude prices trading below budget-balancing levels. With plans to increase spending on diversification projects, the government estimated funding needs of about 86 billion riyals ($23 billion) for 2024.

Why it matters

Some analysts also have a more cautious outlook, forecasting a budget deficit of approximately 4.3% of GDP in 2024 and funding requirements exceeding $46 billion. Despite the challenges, the country's debt level is relatively low, leaving ample room for the government to raise capital.


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