Saudi Arabia the world’s top oil exporter is close to raising a $10 billion loan from a consortium of global banks, Reuters reported according to sources on Wednesday.
The oil-rich kingdom is trying to fill a record budget deficit caused by dwindling oil revenues and reserves.
The Saudi government has been working on ways to work out how to restructure the economy so it no longer relies on oil.
Prince Mohammed bin Salman, the king’s powerful son who directs economic reform, is set to publicize his “vision for Saudi Arabia”, a template for shifting the kingdom into a post-oil era, in Riyadh on April 25.
The kingdom had initially been seeking to raise between $6 billion and $8 billion through a five-year loan for its first foreign borrowing in more than a decade. But the Ministry of Finance raised the amount after drawing significant demand.
The loan, which marks a huge step in Riyadh’s newfound dependence on foreign capital, comes as the sustained slump in crude inspires other Gulf governments, such as Abu Dhabi, Qatar and Oman, to tap international bond markets.
The sources said the loan should be signed before the end of April.
Two of the sources said the pricing was around 120 basis points above the London interbank offered rate.
One of the sources said the lenders included a mix of U.S., European and Japanese banks.
Another said the lead arrangers included JP Morgan, HSBC and Bank of Tokyo-Mitsubishi. Each was contributing around $1.3 billion, with the remainder of the loan coming from other lenders, the source said.
“The deal is very successful, with very competitive pricing,” said Elyas Algaseer, deputy regional general manager at Bank of Tokyo-Mitsubishi. “There was immense market appetite.”
Nobody was available to comment from the Saudi central bank or the finance ministry.
Saudi Arabia Close to Securing $10 Billion Bank Loan
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