Saudi Raises €1.5 Billion via Euro Issuance; Marks The Gulf’s First Negative Yielding Bond

Saudi Arabia tapped the international bond markets on Wednesday, this time with a euro denominated issuance. It raised:

• €1bn via 3Y bonds at a yield of -0.057%, 40bp over Mid Swaps and 20bp inside initial guidance of MS+60bp area
• €500mn via 9Y bonds at a yield of 0.646%, 70bp over Mid Swaps and also 20bp inside initial guidance of MS+90bp area

The bonds, expected to be rated A1/A in line with the sovereign’s rating, received orders of over €3.75bn, 2.5x issue size. The 3Y tranche marked the first negative yielding bond from the gulf region. This is Saudi’s second euro denominated issuance following its 2019 debut deal worth €3bn that drew solid orders of €14.5bn. A banker not involved in the deal said, “It’s aggressively priced…how many people want to buy KSA (Kingdom of Saudi Arabia) risk at negative yield?” Timothy Ash of BlueBay Asset Management added, “Demand probably shows the state of the market at the moment, which is in a state of flux with the sell-off in U.S. Treasuries.”

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