Arab News | Citigroup tells Asharq Bloomberg: Investors are confident in Saudi Arabia’s ‘long-term’ economic story
RIYADH: David Livingstone, chief client officer at Citigroup, believes investor appetite for Saudi debt issuances reflects confidence in the Kingdom’s long-term story, while Gulf countries remain capable of maintaining their positive performance in debt markets despite higher yields and increased global supply.
Livingstone said in an interview with Nour Amache on the “East-West” program on Asharq Business with Bloomberg that the performance of Saudi sovereign issuances, as well as those of the Public Investment Fund, demonstrated the resilience of Saudi Arabia’s market and continued demand from international investors, despite the obstacles created by the Iran war this year.
Livingstone’s comments came after the Kingdom raised $3.25 billion through international sukuk in early September, attracting orders of around $16.5 billion, or more than five times the issuance size. Saudi Arabia tightened the pricing spread by about 30 basis points from the initial guidance.
The Citigroup head added that the pricing adjustment “demonstrates confidence in this long-term story,” placing it within the context of the transformations underway in the Kingdom under Vision 2030.
The comments came after Citigroup helped its clients in Saudi Arabia raise more than $40 billion since the beginning of the year. The bank also decided to increase its direct exposure limits to the Kingdom after it demonstrated “strong economic and financial resilience,” according to CEO Fahad Al-Deweesh.
Debt-market pressures
Higher global yields and increased government borrowing will give investors a wider range of choices in the bond market, Livingstone said, noting upward pressure on yields amid abundant debt supply in emerging markets, Europe, the UK and the US.
Despite this, he said that “Saudi Arabia, and Gulf countries as a whole, can continue this positive performance compared with the recent past.”
Yasir Al-Salman, chief financial officer at the Public Investment Fund, told Asharq Business with Bloomberg that international debt markets would remain the fund’s largest source of financing. The fund had around SR3.4 trillion ($906.1 billion) in assets under management after injecting about SR750 billion into the Saudi economy over five years.
Debt instrument pricing in the Kingdom is linked to US bond yields, which have recently been elevated. The yield on the 10-year US Treasury continued to rise for a fifth consecutive session on Sept. 14, exceeding 5 percent, its highest level since 2023.
Are investors affected by project reviews?
Asked about the effect of media reports concerning the postponement or reassessment of some projects in Saudi Arabia on foreign investor appetite, Livingstone said this did not change the fundamental basis of investor interest in the Kingdom. He said economic diversification remained “the attractive factor for investors,” as infrastructure development and projects connected to the economic transformation continued.
He added that the review was “justified” in light of the economic circumstances surrounding the projects being financed, with attention focused on their feasibility and sustainability.