Saudi Arabia Bond Offering
Saudi Arabia has begun its third bond offering in a month in money markets unsettled by rising dollar interest rates and uncertain oil prices.
The Saudi Arabian Monetary Agency, in a telex Saturday, offered banks 1.5 billion riyals, or $400 million, worth of Government development bonds in one-to-five-year maturities.
– Saudi minister calls low oil prices unsustainable (Houston Chronicle)
(Saudi Arabia needs oil prices to be above $ 70/barrel to survive.)
– Saudi Arabian banks may cut their foreign assets (Emirates Business):
(Saudi Arabia is going down, that is why the banks cut their foreign assets. Soon Saudi Arabia will have to sell U.S. Treasuries and that is when all hell will break loose.)
The offering came amid strong speculation among bankers that the Government, squeezed by falling oil revenues and a dollar firming on international exchanges, would soon devalue the riyal.
A devaluation would increase riyal earnings from oil exports, because most Government oil revenues are received in dollars.
The bonds program, the first major Saudi Government borrowing in 25 years, was begun to help bridge an anticipated budget deficit of 35.9 billion riyals, or about $9.6 billion
Published: July 12, 1988
Source: The New York Times