You are here Saudi Arabia To Issue $2bn In Riyadh Bonds Tuesday, January 31, 2017 - 15:23 Saudi Arabia will issue $2 billion in foreign-currency-denominated bonds in the country’s capital in January, seeking to raise a portion of the funds outside the United States as it looks to diversify its debt portfolio. According to a statement posted on the website of the Saudi Arabian Monetary Authority (SAMA), the state-run sovereign wealth fund’s debt manager Tadawul will issue the bonds to “support the real economy in an environment of growing foreign-currency demand for debt securities.” The proceeds from the sale of the bonds, which matures in December 2022 and are expected to be repaid in US dollars, will be used to finance public infrastructure projects. “This issuance is part of the real economic growth strategy in support of the Saudi economy. It’s also the result of a good execution of that strategy,” SAMA said in a statement late Monday. The kingdom has spent more than $300 billion to cut debt, which stood at around $450 billion at the end of September 2016. It has sold assets, delayed payments and brought deferred payments forward. The bond sale follows Tadawul’s issuance of a $4.5 billion, 30-year bond in November 2016, also with the sale of $2 billion each in January and September. The agency’s issuance comes amid some recent measures by Gulf Arab states to diversify their debt away from the United States, including an $11 billion bond issue by the United Arab Emirates’ central bank in August and $7 billion by Qatar’s central bank in November. The Gulf Arab states have taken measures to protect their currencies from the threat of a US dollar shortage as the country’s rising borrowing costs spook other investors. Saudi Arabia has faced rising dollar debts of its own as it makes large investments in the debt markets. The kingdom has set an official borrowing limit of about $250 billion, and in September last year agreed to buy a $7 billion Riyadh-based firm from Warren Buffett's Berkshire Hathaway BRKa.N. The bond issue by Tadawul will mark the kingdom’s first international bond sale since the government introduced an $11 billion bond in April 2015. Tadawul issues domestic debt in the form of Saudi sovereign bonds, government bonds, and commercial papers. The government issues local currency-denominated bonds as part of its foreign currency reserve management. These securities are considered the safest investments for the foreign currency reserves, and can be used as collateral for a local currency loan, it said. In 2015, the kingdom auctioned $15.9 billion in domestic government debt, down from $20.7 billion in 2014. Its issuance of local debt is one of the few ways to raise funds for its economic plan to drive local economic growth. Saudi Arabia also has the world’s highest level of public debt as a percentage of gross domestic product. It posted a deficit of 13.1 percent of gross domestic product last year, which marks the fifth straight year the deficit has been below 15 percent, according to data from the OPEC cartel. However, the kingdom has also cut net foreign debt by 19.6 percent from a year earlier to $266.6 billion, according to its debt figures. Subscribe to our newsletter and get all our content in your mail box twice a week.