From: Richard Kahn

From: Richard Kahn To: "jeffrey E." <[email protected]> Subject: Fwd: Saudi Date: Wed, 17 Aug 2016 22:07:35 +0000 Attachments: Saudi Arabian Constrained_by_the_Impossible_Trinity.pdf; Saudi_Arabia_- _beyond_oil_but_not_so_fast.pdf Inline-Images: image001.png Richard Kahn HBRK A. s iat s In . Begin forwarded message: From: "Ens, Amanda" < Subject: RE: Saudi Date: August 17, 2016 at 5:31:17 PM EDT To: Richard Kahn < Rich, I'm sorry for the delay. The bond issue is expected to come next month but it hasn't been launched yet. BofAML has not been named as a bookrunner yet. Reuters reports it might come close to being as large as Argentina's $16.5bn in April. They also mention a guesstimate of the potential spread being 80-90bp wider than Qatar (Qatar issued 10 year bonds at 150bp spread over Treasuries in May). http://www.cnbc.com/2016/08/17/reuters-america-mideast-debt-saudi-other-issuers-gear-up-as-gulf-bond- crush-looms.html The trading desk and I will be on the lookout for news about the bond as it comes out. In the meantime, please let me know if you'd like to discuss Saudi fundamentals and economics. In GIO, we had done some Saudi trades with CDS and FX (bearish on Saudi credit and currency). I've attached our research analyst's recent reports about Saudi Arabia. He wrote on August 12 that "Liquidity relief on the back of the upcoming external bond issuance could be used by accounts bearish on oil or SAR prospects as an opportunity to re-initiate payers in rates and speculative and hedging positions in SAR Fx forwards, in our view" (page 2 of the attached Saudi Arabia — Constrained by the Impossible Trinity). Below is an article from Bloomberg. Regards, Amanda Saudi Arabia Said to Tap JPMorgan, Citi, HSBC on Dollar Bond (1) 2016-06-27 06:38:17.320 GMT By Archana Narayanan, Stefania Bianchi and Dinesh Nair EFTA00821126 (Bloomberg) — Saudi Arabia appointed JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. to arrange its first international bond sale, people with knowledge of the matter said. The banks are acting as global coordinators on the issue, according to the people, who asked not to be identified as the decision isn't public. More banks could be added later as joint lead arrangers and bookrunners on the deal, they said. Global coordinators have a key role in overseeing the deal while lead arrangers buy debt and sell it to other banks. The decision on the mandates was made on Saturday night and the kingdom will probably wait until after the summer before selling the bonds, two of the people said. The nation is preparing for a sale of at least $10 billion, separate people familiar said earlier this month. HSBC, JPMorgan, Citi and Saudi Arabia's finance ministry declined to comment. Saudi Arabia is poised to join other countries from the six-nation Gulf Cooperation Council tapping foreign markets to plug budget deficits. The kingdom is shoring up its finances as an era of oil-fueled abundance falters after crude prices slumped. It plans to tap international debt markets as early as September, Minister of State Mohammad bin Abdulmalik Al-Sheikh said during a meeting between Bloomberg News and the Deputy Crown Prince Mohammed bin Salman in April. West Texas Intermediate for August delivery was at $47.56 a barrel on the New York Mercantile Exchange, down 8 cents, at 2:03 p.m. Hong Kong time after losing as much as 72 cents earlier. The contract fell $2.47 to $47.64 on Friday. Well Received "I expect the Saudi Arabia bond deal to be well received, albeit at a price," Anita Yadav, head of fixed-income research at Emirates NBD said by phone on Sunday. "The hunt-for-yield in a world infected with negative rates will probably see good demand for a name like Saudi Arabia that has a strong credit rating and will likely offer attractive returns." In April, it sealed a $10 billion loan -- its first in at least 15 years -- from a group of U.S., European, Japanese and Chinese banks, people familiar with the matter said at the time. The bond sale being considered now would probably come in five-, 10- and 30-year bonds once Ramadan ends next month, separate people with knowledge of the matter said earlier in June. To cover a budget shortfall estimated at about $100 billion this year, Saudi Arabia has been selling local debt and drawing down foreign reserves as well as raising money on international capital markets. It has also outlined an economic transformation plan that includes increasing government debt to 30 percent of economic output by 2020 from 7.7 percent. --With assistance from Arif Shari! To contact the reporters on this story: EFTA00821127 Archana Narayanan in Dubai at Stefania Bianchi in Duba. Dinesh Nair in London a To contact the editors responsible or is story: Dale Crofts a Samuel Potter at Cecile Gutscher Source: Bloomberg Amanda Ens Director Rank of Amprira Morrill lynch The power of global connections"' From: Richard Kahn [mailto: Sent: Tuesday, August 16, 2016 2:47 PM To: Ens, Amanda Subject: Re: Saudi Thanks. Sent from my iPhone On Aug 16, 2016, at 2:37 PM, Ens, Amanda Rich, I hope to have some information from our desk in London tomorrow. Regards, Amanda Amanda Ens Director Bank of America Merrill Lynch wrote: The power of global connections"' EFTA00821128 <image001.png> This message, and any attachments, is for the intended recipient(s) only, may contain information that is privileged, confidential and/or proprietary and subject to important terms and conditions available at http://www.bankofamerica.com/emaildisclaimer. If you are not the intended recipient, please delete this message. This message, and any attachments, is for the intended recipient(s) only, may contain information that is privileged, confidential and/or proprietary and subject to important terms and conditions available at http://www.bankofamerica.com/emaildisclaimer. If you are not the intended recipient, please delete this message. EFTA00821129