KSA’s Banks To Sell Dollar Bonds

Saudi Arabia’s banks may follow Banque Saudi Fransi and sell bonds denominated in dollars to better meet the long-term funding needs of infrastructure and industrial projects in the biggest Arab economy.

The world’s top oil exporter is executing more than $500 billion of projects to reduce its reliance on crude exports, modernize the country and create jobs. Some of this project financing needs to take place in dollars as companies seek to import equipment for power plants and refineries.

Banque Saudi Fransi, 31 per cent-owned by Credit Agricole, last week sold $750 million of five-year Islamic bonds, proceeds of which will partly help expand project-finance lending, Chief Financial Officer Philippe Touchard said in an interview May 15.

Deposits at the nation’s lenders are mostly denominated in riyals and held in short-term demand deposits. 

Saudi banks accounted for only 16 per cent of the $7.2 billion of bonds sold by GCC lenders in 2012, Bloomberg reported.