Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 20, 2016
Massive Saudi Arabia Bond Deal Comes to Market
Saudi Arabia is selling a huge bond deal to international investors Wednesday. The country is, “borrowing out of the oil crash,” surmises research firm CreditSights.
The country needs the cash infusion to staunch large budget deficits incurred due to the decline in oil prices. It’s the first time it has sold bonds to international investors, according to The Wall Street Journal, which is reporting the deal size is up to $17.5 billion in three maturities. The 10 year is expected to yield 1.85 percentage points more than the Treasury, or about 3.6%.
CreditSights makes these additional points:
- $17.5 bn of new paper would account for 2.3% of the BAML EM USD sovereign index, with more issuance expected in the coming years.
- Without a sharp recovery in oil prices, Saudi external financing needs over the coming years are going to be very large and the country is likely to have to significantly raise external debt if it is to avoid continued FX reserve burn.
- If Saudi Arabia doesn’t see new financial inflows and oil prices remained at around $50 until 2020, then, assuming no collapse in imports or growth in non-oil exports, foreign exchange reserves would get close to depletion by 2020.
- If oil prices do rise more sharply, Saudi Arabia would be in a safer position but that could also deter reform efforts, which in turn would continue the countries over-dependence on oil revenues for the foreseeable future.
Ian Lyngen of BMO Capital Markets says it could have an impact on Treasury trading today. He writes in his morning note:
More germane to Treasuries today will be the large Saudi Arabia deal that is expected to price – we haven’t confirmed the full details on the size, but we’re hearing the in the range of $15 bn to $17.5 bn split between 5s, 10s, and 30s. We’re assuming at least some of that has been rate-locked, so we’re anticipating some marginal bullish pressure on the unwind, even if it’s ultimately just an intraday flow, it does line up with the technicals.
15 Comments on "Massive Saudi Arabia Bond Deal Comes to Market"
Sissyfuss on Fri, 21st Oct 2016 7:52 am
Perhaps their bond issuances and accompanying public offering of shares of Aramaco is because of their intimate knowledge of the coming collapse of their legacy fields. After all, it is not a sin to swindle the infidels but rather a duty.
markisha on Fri, 21st Oct 2016 11:41 am
I don’t understand how this PRINT BABY PRINT poncy scheme is still functional. This is unbelievable.
makati1 on Fri, 21st Oct 2016 5:20 pm
Markisha, it’s because the world is full of greedy idiots.
onlooker on Fri, 21st Oct 2016 5:32 pm
Our whole Economies have devolved into a frenzied greedy idiotic fire sale closing out of business farce. Unfortunately, what is going out of business is Earth and its life support systems
peakyeast on Fri, 21st Oct 2016 5:39 pm
@All:
I recommend watching this video:
Requiem for the American Dream
https://www.youtube.com/watch?v=lfajXvTYChI
I Suspect this will be the last movie of Noam Chomsky – whose opinions and arguments I highly respect.
onlooker on Fri, 21st Oct 2016 6:12 pm
Me too. Mr. Chomsky has been a voice refusing to be silenced about the abuses of the US Empire and the ruinous path it is leading the entire world towards
Keith McClary on Sat, 22nd Oct 2016 12:27 am
Saudi supposedly has hundreds of $billions of assets (US bonds?). Why are they borrowing? It’s like running up your credit card at 20% interest when you have money in the bank.
Maybe they don’t actually have those assets.
markisha on Sat, 22nd Oct 2016 4:11 am
you are probably wright Makati
makati1 on Sat, 22nd Oct 2016 5:59 am
Keith, or maybe they are afraid of the Us retaliation if they cash them all in. The cashing in of USTs & USBs is increasing daily. China is leading the pack so far, but other countries are also beginning to dump their US paper before it becomes worthless.
makati1 on Sat, 22nd Oct 2016 6:10 am
I might add that the world is beginning to see that US paper is a chain that binds them to the empire. The US can freeze their assets anytime, for any excuse or none at all.
Oh, and why do you think the pressure is on to get rid of cash? So they have the same power over all of you sheeple. You go to the ATM and get a message that your account is frozen. No cash. No credit card that works. Nothing to pay the bills or buy food or gas or…
Cannot happen? I can tell you that it can. There was a glitch in my Citi account last year and they froze it for 6 weeks until I could get it straightened out after many long distance phone calls to their security department. Their excuse? “We thought it was being used by an unknown person.” No record that it actually was and no money missing or use by anyone but myself. So obviously they don’t need a reason. Someone just decided to freeze it. Accident? Deliberate? I have no idea. You are at their mercy if you do not have CASH to cover such “glitches”. I did and always will.
Davy on Sat, 22nd Oct 2016 6:22 am
Makati, you have been preaching that failed message now for as long as I have been on this board. Where are the Chinese economically now? They are in the worst shape of all major powers systematically with their financial system and currency. There is nothing worse than being an overpopulated export driven country addicted to high growth. They are a huge country and a major power so in a sense they are not going anywhere. The US and Europe are in a similar situation with systematic economic dysfunction with debt, unfunded liabilities, and repressed markets. None of the major powers can do much in relation to other major powers and be effective. We are all locked in the embrace of collapse. You would think after so many months of being wrong you would realize your errors.
Davy on Sat, 22nd Oct 2016 6:29 am
Makati, you do realize that the Philippines is a location of serious online and financial crime. This is especially true in Manila. They rank close to Nigeria with people who search the world for opportunities to steal. I find it hard to believe it took 6 months to correct your problem. You probably got hung up on because you treated the poor call center with disrespect. I wish I was a fly on the wall for that conversation. LOL
onlooker on Sat, 22nd Oct 2016 7:23 am
We are all locked in the embrace of collapse.—–I have to agree with Davy’s assessment. Once one big domino falls all will fall. That is why the sham of the stock markets and the printing press, debt based system and the whole financial farce is universally played and adhered too. If not the whole things comes crashing down.
Boat on Sat, 22nd Oct 2016 8:15 am
mak,
The cia or the P’s prob ran a check on you because of your wish of system collapse. Maybe your now in the crazy but harmless category. Many countries won’t let posters like you or sites like peakoil.com exist. Durante likes control so your access to the world could end at any time.
peakyeast on Sat, 22nd Oct 2016 8:26 am
Concerning the freeze of asserts:
A close friend of mine who is pensioned and a former international safety inspector of nuclear power plants – he is often criticising the Belgium governments policy on immigration.
One day he found that he pension had been suspended for no reason. He contacted the appropriate office in Belgium and they said that they could not see what had caused the sudden stop of pension payments. What they said was: They had a “file” on him that had been created recently and they asked him to read his pension papers very closely.
In the pension papers signed some 50 years ago it said that if he criticises the government they can withhold and suspend his pension.
So much for freedom of speech in Belgium – and on top: The government are too chickenshit to even admit that they enforce censorship of private citizens by the means economic “warfare”.