Saudi Arabia issues first sovereign bonds since 2007, says cbank gov

Saudi Arabia has issued SAR 15 billion in sovereign bonds to local banks this year in an effort to help finance its budget deficit triggered by lower oil prices, the kingdom’s central bank governor Fahad Al-Mubarak told Al Eqtisadiah newspaper on Friday.

The issuance was the first of its kind in the kingdom since 2oo7. Al-Mubarak also added that more bonds will be issued in the near future.

The report did not reveal financial terms, the issue date, or whether the local currency bonds were Sharia-compliant, which would allow Islamic banks to buy them.

The country has seen its budget gap widen this year, which Al Mubarak expects to exceed the SAR 145 billion projected earlier in th year. The International Monetary Fund (IMF) estimated the budget deficit to reach 20 percent of GDP, or $150 billion.

Riyadh has already withdrawn SAR 244 billion from its reserves this year to date to help finance the deficit.

Saudi banks will likely buy government debt, he added, but would not see a tightening in their liquidity, at least initially.