Wall Street is ‘Looking for Opportunities’ in Saudi Arabia
Some of the world’s leading financiers are returning to Saudi Arabia after the oil-rich kingdom yielded some of the year’s biggest merger and bond deals; An about 40 percent increase in oil prices since the start of the year has helped too. FDI more than doubled last year to about $3 billion; “The future is bright” for the Saudi economy,” says HSBC.
BE2C2 Report – Saudi Arabia’s finance minister told CNBC that a recent fall off in foreign investment to his country will end as Wall Street money was now “looking for opportunities.”
Speaking to CNBC’s Hadley Gamble on Thursday, Mohammed Al-Jadaan, said the financial conference held in Riyadh this week which was attended by high-profile figures from HSBC, J.P. Morgan and BlackRock, showed that foreign investment was ready to make a return.
“Money is looking for opportunities. We have mega projects being built around the kingdom. Infrastructure is being built, health care demand is increasing, and hospitality is significantly increasing,” he said.
“We have heard from top international investors and they are committing billions. We are not talking about a little money in the years to come.”
International investors flocked to lend money to Saudi Arabia’s hugely profitable state-owned oil company earlier this month. Demand for Saudi Aramco’s bonds surged above $100 billion, according to a source familiar with the situation- more than 10 times the $10 billion that had been expected.
“Saudi Arabia remains one of the wealthiest countries in the world with one of the world’s largest sources of energy reserves, which helps explain the huge interest in Saudi Aramco’s recent bond issuance,” said Emily Hawthorne, Middle East and North Africa analyst at Texas-based advisory firm Stratfor Enterprises.
JPMorgan Chase & Co., Morgan Stanley, HSBC, Citigroup Inc. and Goldman Sachs Group Inc. last month helped Saudi Aramco raise $12 billion of bonds in one of the most oversubscribed debt offerings in history.
Morgan Stanley and JPMorgan are also advising the oil firm on its $69 billion acquisition of local chemical giant Sabic.
Saudi Arabia has already seen formidable success in its recent tapping of the bond market: It issued $7.5 billion in sovereign bonds in January which drew an impressive $27 billion in orders. Saudi Arabia has “A1” and “A+” ratings from agencies Moody’s and Fitch, respectively, a sign of reliability and low risk for investors.
Al-Jadaan said foreign investments in the kingdom had jumped markedly since 2017 and that was down to a higher level of predictability and friendlier regulations.
Inside Goldman Sachs, senior executives indicated to Bloomberg that Saudi Arabia offers a more promising environment for growing the investment bank’s business than other parts of the Middle East, according to one senior banker at the U.S. bank cited by the report.
(BE2C2 Report is a data journalism initiative of Irshad Salim Associates, a New Jersey, USA, based consulting firm in association with BE2C2 in Pakistan)