Saudi weighs selling dollar sukuk as soon as October

Saudi Arabia is considering selling a dollar-denominated Islamic bond as early as next month as the kingdom seeks to take advantage of lower borrowing costs, according to people with knowledge of the matter.

The government is close to hiring banks for the possible sukuk sale, the people said, asking not to be identified because the information is private. A spokesman for the Finance Ministry didn’t immediately respond to requests to comment.

A sale would come just weeks after attacks on the kingdom’s oil facilities slashed Saudi Aramco’s crude output by half. Still, Finance Minister Mohammed Al-Jadaan said the strikes had “zero” impact on the country’s revenue. S&P Global Ratings last week affirmed the country’s rating at A- with a stable outlook.

International sales

Emerging-market sovereign borrowers are returning to debt markets as stimulus from central banks cuts borrowing costs and investors chase yields. South Africa last week raised $5bn from its first sale since May 2018, while Abu Dhabi sold $10bn in bonds.

With one of the world’s lowest debt levels, Saudi Arabia has been one of the biggest issuers in emerging markets after a drop in oil prices prompted the government to cut spending and seek alternative sources of funding.

The kingdom said in December it plans to raise about $32bn from local- and foreign-currency debt this year to help fund its budget deficit. Saudi Arabia has raised $10.9bn on international markets so far this year.