Saudi Gazette report

RIYADH — Minister of Finance Muhammad Al-Jadaan said on Wednesday that the successful offering of the Kingdom’s inaugural euro-denominated international bond as part of government’s international program for the issuance of debt instruments illustrates the Kingdom’s position as a leader in the region as well as an important player in international debt capital markets.

The minister noted that the euro-denominated bonds come as part of the Debt Management Office’s (DMO) role to secure the Kingdom’s financing needs at the best possible costs in the short, medium and long term, with risks in line with the Kingdom’s financial policies.

“This will help achieve one of the strategic objectives of the ministry in terms of the optimum use of state assets and innovative financing that contributes to the sustainability of the Kingdom’s access to various international markets at fair pricing,” he said.

Al-Jadaan’s remarks came after the ministry’s announcement on Wednesday about the successful completion of the first offering of international bond denominated in the euro currency with a total issue of €3 billion (SR 12.7 billion) divided into two tranches. The minister said that the order book peaked at 13.5 billion euros, which was 4.5 times oversubscribed.

“This highlights the strong demand of both existing and new investors in the European Union region, showing their high level of confidence in Saudi government securities, which allowed the DMO to tighten the pricing range to reach a yield of 0.78 percent in the 8 year and 2.04 percent in the 20 year tranches. One of the advantages of offering a euro bond is to increase the diversity of investors, as some investors invest in the euro currency exclusively,” he said, adding the very high demand has shown that the strength of Saudi Arabia enables it to enter multiple markets at any point in time and the capability of financing diversification.

It is worth to note that the DMO under the Ministry of Finance launched a non-deal road show visiting eight European cities: London, Paris, Milan, Frankfurt, Amsterdam, The Hague, Zurich and Munich; meeting 77 European investors during the nine-day trip.

Major points of discussion were Saudi Arabia’s continued progress in the global and local capital markets, continued economic reforms and the Kingdom’s commitment and progress forward towards achieving the Vision 2030.