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Kuwait, a top oil producer, raised $11.25bn from a three-part bond sale, drawing hefty investor demand for its first US dollar issue since 2017 in a strong return to global debt markets after years of domestic political gridlock.
The Gulf state was the latest sovereign from the region to tap the bond market as strong global appetite and attractive borrowing costs allow governments to diversify funding sources to help plug budget deficits and invest in economic diversification strategies.
Kuwait sold $3.25bn in a three-year portion at 40 basis points (bps) over US Treasuries, $3bn in a five-year tranche at 40 bps over the same benchmark and $5bn in a 10-year portion at 50 bps.
Order books were over $23bn at launch, fixed-income news service IFR reported, which allowed pricing to tighten from early guidance.
Although there were concerns about Kuwait’s governance, public finances, oil dependence and limited non-oil economy, its low level of outstanding debt was reassuring to investors, said Justin Alexander, director at Khalij Economics and Gulf analyst at GlobalSource Partners.
Kuwait has estimated sovereign wealth assets of more than $1tr. It does not disclose exact figures.
It passed a new public debt law in March, after the previous one expired years ago. That raised the borrowing ceiling to 30 billion dinars ($98.24bn) from 10 billion dinars previously and allowed for the possibility of longer borrowing terms.
The law, like other reforms, had been gridlocked for years over persistent clashes between appointed governments and Kuwait’s directly elected parliament. The emir dissolved parliament last year for up to four years, paving the way for the government to push through reforms.
Despite plans to diversify revenue sources away from hydrocarbons, oil revenue accounted for almost 90 per cent of government revenue in the last fiscal year.
