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Saudi government to sell $5 billion worth of bonds

The Saudi Arabian government is raising up to 20 billion riyals ($5.3 billion) from banks in this month's sale of domestic bonds, financial website Maaal reported on Tuesday.

The government began the regular monthly sales in mid-2015 to help cover a budget deficit caused by low oil prices. Since then, it has sold 156.6 billion riyals of bonds, of which 70.5 billion has come in the first half of this year, Maaal said.

The government has informed banks of August's allocations, Maaal quoted unnamed sources as saying, without specifying how large they were.

There are signs that Saudi banks are becoming less willing or able to buy government bonds as persistently low oil prices reduce the amount of spare cash they have available for such purchases.

Saudi banks' holdings of government bonds increased by just 3.1 billion riyals month on month in June, a slower rise than in previous months, central bank figures show. Bankers say that because the bond offers are shrouded in secrecy, it is impossible to be sure how much debt the government is selling.

Total issue
Maaal quoted sources as predicting issues in 2016 would total 100 billion riyals.

In this month's sale, the government offered five-year bonds at 64 basis points over US Treasuries, seven-year bonds at 77 bps over and 10-year bonds at 91 bps over, Maaal said. That is within the pricing ranges offered in last month's sale.

The government also offered floating-rate bonds. Five-year bonds were offered at 25 to 30 bps below the three-month Saudi interbank offered rate, seven years at 10 to 15 bps below and 10 years at flat to 5 bps above Saibor - the same ranges as in July's offer. - Reuters