Saudi Arabia is reportedly seeking a bank loan of between $6 billion and $8 billion U.S., in what would be the first significant foreign borrowing by the kingdom's government for over a decade.
Riyadh has asked lenders to submit proposals to extend it a five-year U.S. dollar loan of that size, with an option to increase it, to help plug a record budget deficit caused by low oil prices.
Last week, Reuters reported that Saudi Arabia had asked banks to discuss the idea of an international loan, but details such as the size and length were not specified.
The kingdom's budget deficit reached nearly $100 billion U.S. last year. The government is currently bridging the gap by drawing down its massive store of foreign assets and issuing domestic bonds. But the assets will only last a few more years at their current rate of decline, while the bond issues have started to strain liquidity in the banking system.
The firm has sent requests for proposals to a small group of banks on behalf of the Saudi Ministry of Finance, the sources said. They added that banks participating in the loan would have a better chance of being chosen to arrange an international bond issue that Saudi Arabia may conduct as soon as this year.
Analysts say sovereign borrowing by the six wealthy Gulf Arab oil exporters could total $20 billion U.S. or more in 2016 - a big shift from years past, when the region had a surfeit of funds and was lending to the rest of the world.
All of the six states have either launched borrowing programs in response to low oil prices or are laying plans to do so. With money becoming scarcer at home, Gulf companies are also expected to borrow more from overseas.
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