Kuwait starts its first sale of Dollar bonds in eight years

KUWAIT is returning to the international bond market for the first time in eight years.

The OPEC member is planning to issue a bond with tranches of three, five, and 10 years, according to a person familiar with the matter, who requested anonymity because the information is not public. Initial price talk is around 70 basis points over US Treasuries for the shortest tranche, the person added.

The deal will be Kuwait’s first Eurobond since 2017 and Bloomberg has previously reported it was ready to issue several billions of dollars of debt.

The Gulf state of around 5 million people is the world’s biggest oil producer on a per capita basis. It is rated A1 by Moody’s Ratings, the same level as Japan and China.

The country has a debt-to-gross domestic product ratio of less than 10%, according to the International Monetary Fund. Yet the Washington-based lender sees that figure rising to around 25% by 2030 — still low by the standard of most sovereign bond issuers — as it takes on more debt to cover its fiscal deficits.

The nation’s cabinet in March approved a long-awaited law that paved the way for it to return to global debt markets. The legislation was held up for years by political wrangling.

Kuwait’s only outstanding dollar bond, totalling $4.5 billion and maturing in 2027, trades with a yield of about 4.3%.

In June, officials from Kuwait’s finance ministry started the process of sending a request for proposal to banks, with the aim of raising about $6 billion from international debt markets. It was unclear whether Kuwait planned to raise the full amount in a single issuance.

Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co. and Mizuho are the main banks managing Tuesday’s deal.