This is hugely important, not for the level of indebtedness for The House of Saud, but for how accessible credit markets are for Saudi Arabia.
With $600 in fx reserves and hardly any debt, one would surmise the amount to insure against Saudi debt would be substantionally less than the bankrupt loafers in Lisbon.
The cost of insuring the kingdom’s debt more than doubled in the past 12 months to 190 basis points on Thursday, the highest since April 2009, according to CMA prices compiled by Bloomberg. That’s six basis points more than contracts linked to debt from Portugal, whose rating is seven levels below Saudi Arabia’s Aa3 investment grade at Moody’s Investors Service. The Arab nation’s credit-default swaps traded at 185 basis points on Monday.
The sole problem is that 80% of Saudi Arabia’s revenues comes from oil. They’ve dug themselves a nice grave by refusing to cut production. As such, they’re scheduled to burn through $200 mill in reserves this year, at a time when credit markets are telling them to buzz off.
This likely explains the reasons why they’re exploring options to IPO Aramco.
Dark days are ahead for the Kingdom.
If you enjoy the content at iBankCoin, please follow us on Twitter
80% of my income comes from my job yet I get better rates than the Saudis. The markets have a way of ending wars be they violent or economic.
Erl to the 20s. …. unless they stop this shit ..
wowza you’re working ’round the clock these days. just when I was enjoying the pending market crash, $10 oil and a global recession the GS chick comes on and reminds me it’s all muddle. status quo for years and will be for many more to come. drama.
Saudis not gonna stop anything…this is another terrorist mission….a suicidal one that kills & injures many others as well.
Fucking morons. They think they are punishing the United States? Less they forget that we have a diversified economy? Sure they might BK a few horse shit, lazy, lollygagging E&P companies, but big Oil in the US will live on, while the sole source of 80% of their GDP is hammer fisted into oblivion.