RIYADH: Saudi Arabia has raised three billion euros ($3.4 billion) in its first euro-denominated bond sale, the government said Wednesday, as the petro-state taps new funds to plug a budget deficit. The finance ministry announced the "successful completion of the first offering of an international bond denominated in the euro currency… with a total issue of 3 billion euros".

The world's top crude exporter, which had previously only issued bonds denominated in dollars, has posted budget deficits since oil prices crashed in 2014. The order book for the bond sale "peaked at 13.5 billion euros, which was 4.5 times oversubscribed," the ministry said in a statement.

The bonds are split into an eight-year tranche offering a 0.78 percent yield and 20-year notes yielding 2.04 percent, it added. "One of the advantages of offering a euro bond is to increase the diversity of investors," said Finance Minister Mohammed Al-Jadaan.

"The very high demand has shown that the strength of Saudi Arabia enables it to enter multiple markets". Riyadh has posted an accumulated budget shortfall of $313 billion over the past five years and projects another substantial deficit for 2019.

The government announced an expansionary budget this year as it seeks to boost the economy and diversify away from oil revenue.
Saudi Arabia has sought to raise money through the debt markets to help fund its economic transformation program. To generate additional sources of income, the kingdom has also increased the prices of fuels and electricity, imposed a five-percent value added tax (VAT) and levied duties on 11 million expatriates. - AFP