Saudi MoF Announces Successful Stage in International Syndicated Loan Refinance Facility
Saudi Debt Management Office (DMO) of the Ministry of Finance (MoF) reported that all banks participating in the international syndicated loan confirmed their approval of the terms, which is another successful stage in the amendment, repricing and extension of the Kingdom’s 2016’s $10 billion loan.
DMO announced that request for proposals were sent to the 14 banks that participated in the 2016 transaction in addition to a group of financial institutions who have sought to join the Kingdom’s core bank group.
Due to the exceptional response to this process from the global bank market, from both existing holders and new banks, the total facility size will increase by $6 billion to $16 billion.
In response to the strong global demand for Shariah compliant issuance from the Kingdom, a significant Islamic tranche will be introduced to the transaction, demonstrating and supporting the Kingdom’s Vision 2030 goal of becoming the leading Islamic finance hub, added the Office.
The consistent and prudent steps taken by the Kingdom over the past two years to realize Vision 2030 via the Fiscal Balance Program and other economic reforms have been reflected in the scale and nature of the global market response to this benchmark transaction.
Pricing for the revised facility, will be set at a margin representing a 30 percent reduction from levels set in 2016.
Currently, the DMO is finalizing the documentation process for the transaction and intends to close the financing by mid-March.
Minister of Finance, Mohammed al-Jadaan, commented on the successful outcomes saying it was led and coordinated with the partner financial institutions.
"We are pleased that the transaction, with its increased size and enhanced terms, not only reflects the global banking community’s recognition of the strengthening of the Saudi economy, but is also a further step in the realization of the DMO and Ministry of Finance’s ambitions to achieve a prominent position for the Kingdom in the international financial markets," Jadaan indicated.
The minister pointed out that this operation validates the Ministry of Finance’s role as part of Vision 2030’s ambition to create a global investment powerhouse.
The Debt Management Office was established in the fourth quarter of 2015 to secure Saudi Arabia’s financing needs with best financing costs in the short, medium, and long term under acceptable degree of risk in compliance with the financial policies.
Meanwhile, Saudi MoF completed the establishment of an international debt issuance program which was done by the DMO. The office also appointed a number of international investment banks to coordinate a series of meetings with debt investors.