Big frontiers eye up more international bond sales

2016 was a bumper year for dollar bond sales from frontier markets and the recent pull-back in US Treasury yields has prompted a number of countries to consider returning to international markets. Last week, Argentina issued US$7bn in dollar bonds in a sale that attracted strong demand from investors. Meanwhile, comments from officials suggest that Saudi Arabia will follow up October’s record-breaking US$17.5bn bond issue with another sale in the first quarter of this year. Kuwait is on course to launch its inaugural international bond in the coming months, while Nigeria is also planning a fresh bond sale. As we’ve noted before, selling bonds on the international market will help many of these countries cope with the fallout from lower commodity prices. As well as financing budget deficits, the proceeds can be used to plug current account shortfalls, which would help to shore up currencies and stem the bleed of foreign exchange reserves. In Saudi Arabia’s case, last year’s bumper bond sale has helped to alleviate concerns that the riyal will be devalued.