Saudi Arabia may consider funding in Chinese yuan

Saudi Arabia is willing to look into obtaining funds in Chinese yuan, in a bid to strengthen ties with its top market for oil, Reuters reported on Thursday

, citing Vice Minister of Economy and Planning Mohammed al-Tuwaijri.

Obtaining some funds in yuan could give Saudi Arabia more financial flexibility, he added.

“One of our main objectives is to diversify the funding basis of Saudi Arabia,” Tuwaijri said, speaking at a Saudi-Chinese conference in Jeddah.

“We will do that through access to investors or bodies of liquidity in the markets. China is by far one of the top markets. We will also access other technical markets in terms of unique funding opportunities, private placements, panda bonds and others,” he added.

Panda bonds are yuan-denominated bonds from non-Chinese issuers that are sold within China.

Riyadh is also willing to consider funding in renminbi and other Chinese products, Tuwaijri said, noting that the Industrial and Commercial Bank of China and other divisions have expressed interest in the opportunity.

Moreover, Saudi Arabia’s Public Investment Fund (PIF) is mulling several investment opportunities in China's transport sector and other infrastructure industries, the minister said, without giving further details.

Saudi Arabia, the world’s top oil exporter, is seeking to raise money abroad to cover its budget deficit and fund major investment projects.

The Kingdom conducted the largest-ever emerging market bond sale last October, selling $17.5 billion worth of debt as part of efforts to make up for a budget shortfall caused by the plunge in oil prices.

The country also raised $9 billion in is first dollar-denominated Islamic bond sale in April this year.