Saudi Arabia borrows $9 billion with first Islamic bond sale
Apr 13, 2017 01:34 PM EDT
The kingdom's sale of Islamic bonds worth $9 billion comes less than six months after the world's biggest oil exporting country tapped global debt markets for the first time by selling $17.5 billion in conventional bonds.
Half of the new Islamic bonds will be repaid in five years, while the remainder will mature in 10 years.
The effort to raise funds from global investors follows a crash in oil prices that turned the kingdom's massive budget surplus into a gaping hole. Just five years ago it was unthinkable that oil-rich Saudi Arabia would need to borrow money from abroad.
Saudi Arabia said in December it's budget deficit for this year will reach 198 billion riyals ($53 billion), or 7.7% of its GDP. It planned to narrow the gap by issuing debt and tapping its foreign reserves.
The kingdoms foreign reserves, however, have also taken a hit. The latest data showed them sinking to $514 billion in February from $593 billion the same time last year.
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