Saudi Arabia issues euro-denominated sovereign bonds with negative rate

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Saudi Arabia's National Debt Management Center (NDMC) announced that it opened and closed its second international euro-denominated sovereign bond sale on Feb. 24, as part of its plan to attract the largest number of orders from investors.

The center said it seized this opportunity to tap the euro market through issuing bonds with a negative rate, adding that this is the second largest tranche issued with a negative rate outside the European Union.

NDMC raised nearly $1.5 billion from the issuance that is divided into two tranches, with the first three-year tranche of 1 billion euros set to mature in 2024, with a negative rate of -0.06%. The second nine-year tranche of 0.5 billion euros is scheduled to mature in 2030, with a rate of less than 1%.

This is the second international bond issuance for the Kingdom in 2021 as it sold bonds worth $5 billion in January.

The center stated that the benefits of tapping the euro market include expanding investor base as some investors only invest in euro, adding that the Kingdom was the first GCC country to issue euro-denominated bonds in 2019.

The high demand for the bond sale indicates that the Kingdom is able to tap different markets without affecting debt prices in the long run, in addition to the possibility of diversifying the sources of financing and proving the Kingdom's ability to build and enhance its strategic ties.