Azernews.Az

By Bloomberg

Saudi Arabia plans to sell as much as 20 billion riyals ($5.3 billion) of debt on Monday as the OPEC producer seeks to plug its budget deficit after oil prices plunged, two people familiar with the matter said.

The Saudi Arabian Monetary Authority is arranging the auction for Aug. 10, part of a wider plan to raise between 90 billion riyals and 100 billion riyals before year-end, the people said, asking not to be identified as the information isn’t public. The bonds will have tenors of five, seven and 10 years and will be placed with local banks, they said.

OPEC’s biggest oil exporter plans to boost its debt market as the kingdom diversifies its $752 billion economy amid falling crude prices. With income from oil accounting for more than 90 percent of revenue, a more than 50 percent drop in prices in the past 12 months has put pressure on the nation’s finances. Saudi Arabia’s budget deficit may widen to 20 percent of gross domestic product this year, the International Monetary Fund estimates.

The five-year tranche may be priced between 33 basis points and 38 basis points above similar maturity U.S. Treasuries, the seven-year segment between 39 basis points and 44 basis points and the 10-year securities between 45 basis points and 50 basis points, the people said.

Saudi Arabian Monetary Authority’s head of public relations didn’t respond to calls seeking comment.