Kuwait considers $9.9bn international bond

25 October 2016

Oil-rich country’s sovereign wealth fund preparing technical and legal framework for the transaction

Kuwait, one of the major Opec crude producers, is still mulling the option to tap the international bond market to raise as much as KD3bn ($9.9bn), according to a senior official at the finance ministry.

Kuwait’s sovereign wealth fund, the Kuwait Investment Authority (KIA), will start looking at measures required to complete an offering needed at the end of this month, media reports cited finance ministry undersecretary Khalifa Hamada as saying in an Al-Arabiya TV interview.

“We will look at the economic feasibility and the cost on the country for the issuance, as it is very important to take this into consideration,” he said, adding that Kuwait has not yet engaged with international banks regarding the possible bond sale as KIA is still preparing the technical and legal frameworks for the transaction.

The GCC accounts for about a third of global oil reserves and its governments rely heavily on the sale of crude for revenues. Kuwait’s other Gulf peers are looking to raise funds through debt markets as oil prices remain more than 50 per cent below their mid-2014 peak of $115 a barrel.

Saudi Arabia, the biggest oil exporter in the world, set an emerging market record last week when it completed a $17.5bn debut bond sale. Qatar, in May, sold multiple-tranche, $9bn-worth of eurobonds, while Abu Dhabi and Bahrain tapped the market earlier this year.

Opec members agreed to consider a production cut in September after nearly two years of pumping at frantic pace. Oil prices have rallied since in anticipation of a formal agreement in November to curb production for the first time in eight years.

“Until the first half of this fiscal year, at the end of September, the deficit reached about KD3.6bn and (the full-year deficit) is expected to be lower than estimated in the budget due to the slight rise of oil prices,” news agency Reuters quoted Hamada as telling the TV channel.

Kuwait’s finance minister, Anas al-Saleh, said in July that the country’s deficit for this fiscal year could reach KD9.5bn and the shortfall would be covered through drawdowns of reserves as well as issuing bonds both internationally and locally.

“A big chunk” of that figure has already been raised by the Central Bank of Kuwait, said Hamada.

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