Saudi Arabia is looking to raise more than $7bn in bond sales this week in a bid to offset some of the losses from the steep oil price decline in recent weeks.
According to Reuters, the Saudi ministry of finance sold $2.5bn in 5-year bonds at 260 basis points (bps) over US treasuries, $1.5bn in 10-year bonds at 270 bps over the same benchmark and $3bn in 40-year bonds at 4.55%.
Saudi Arabia is the world's biggest oil exporter, but is tapping the market after it agreed an output cut with other major oil-producing nations at the end of last week. However despite the deal among OPEC members to reduce supply, Brent crude fell by more than 6.5% in a day yesterday to close at $27.69 a barrel as markets closed on Wednesday.
As recently as February Brent crude was trading at $54 per barrel.
Yesterday the International Energy Agency (IEA) said in its report, "The impact of containment measures in 187 countries and territories has been to bring mobility almost to a halt," as the agency warned the world's demand for oil will probably decline by 9.3 million barrels per day for the year.
In April, global oil demand is expected to decline by 29 million bpd compared to April 2019.
Mohieddine Kronfol, a fund manager in Dubai told the Wall Street Journal: "At this oil price, there is pain for everyone. We are expecting [bond] issuance to pick up significantly."
Reuters reported that the bond sale yesterday involved eight financial organisations, including HSBC, Citi, Goldman Sachs, Bank of China, Mizuho and Samba Capital.