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Saudi Arabia’s debt binge eases bank liquidity drought

Saudi Arabia’s repeat visits to international bond markets and a partial recovery in the price of oil, its biggest export, is easing a liquidity squeeze that was hampering its financial system.

As the country finalized its first issue of dollar-denominated Islamic notes, six months after selling the biggest ever bond by an emerging market country, an interest rate used by Saudi banks to price loans stands at its lowest level in almost 14 months. That rate, known as Saibor, will probably fall further after the latest sukuk issue, according to Anita Yadav, head of fixed-income research at Emirates NBD PJSC, Dubai’s biggest bank.

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