The government of Saudi Arabia intends to continue monthly sales of bonds in the local market, as it seeks to finance the budget deficit and develop the emerging debt market.
Saudi Arabia's debt management office (DMO) plans to introduce an auction system for government bonds and for taps of existing issues, said DMO head Fahad Al-Saif.
According to Bloomberg, Fahad Al-Saif, head of the debt management office at the Ministry of Finance, said that local issuance makes up about 65% of the kingdom’s sales and the government wants to maintain this ratio “plus or minus 10% for the foreseeable future.”
Saudi Arabia turned to the bond market after the fall in oil prices that hit its public finances, making the budget deficit rise to 15% of GDP.
Earlier, in October 2016, the kingdom sold $17.5 billion of bonds on the international market, which became the largest bond issue among emerging nations.
Over the past year, the kingdom sold $9 billion in international Shariah-compliant debt and $30 billion in conventional bonds. It also raised billions of riyals in local sukuk, a move Al-Saif said was aimed to develop a yield curve.
In total, 38 billion ($10.1 billion) of local debt were sold over the past four months.
The government is also studying accommodating regional participation in local sukuk sales and negotiates with banks on how best to implement this idea.
