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Saudi supply exceeds expectations despite oil attacks

Saudi Arabia's $ 2.5 billion Islamic bond issued on Tuesday drew requests for more than $ 13 billion in the first international debt issue since the attacks on Saudi Arabia's essential oil facilities in mid-September.

On Tuesday, Saudi Arabia sold $ 2.5 billion in Islamic bonds, or sukuk, returning to the bond market to take advantage of low borrowing costs, hoping to replenish government coffers as prices rise. low oil prices depress revenues.

The 10-year bond was priced at 127 basis points during benchmark midswaps, below the 145-150 basis points guidance on the midswap rate due to strong demand, Bloomberg reports.

Investor demand for Saudi Arabia's Islamic bond was high, even after the September 14 attacks on critical oil infrastructure that knocked out more than half of Saudi oil supplies.

In recent years, the Kingdom has borrowed a lot of money from international bond markets to offset lower government oil revenues due to low oil prices.

In July this year, the Saudis issued a debut eurobond of $ 3.3 billion (3 billion euros). Since its first foray into international bond markets in late 2016, the UK has raised $ 60 billion in international bond issues, according to Reuters estimates.

Related: Oil recovery with rare market optimism

The latest bond issuance comes when Saudi Arabia last week delayed its much-vaunted list of its oil giant Aramco by at least several weeks.

The main hurdle is that international investors are not really buying the Saudi insistence that the world's largest oil company is worth $ 2 trillion.

At a meeting to endorse the IPO last week, banks Aramco hired for the listing made it clear that foreign investors are not rushing to invest in the Saudi state oil company at a $ 2 trillion valuation. . According to Bloomberg sources, the valuation should be closer to $ 1.5 trillion if Aramco wants to spark real interest among international investors.

By Tsvetana Paraskova for

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