Saudi Arabia might pull a Qatar

Thomson ReutersSaudi Arabia’s Deputy Crown Prince Mohammed bin Salman.

Saudi Arabia might take a page right out of Qatar’s playbook.

The Kingdom is thinking about a sale of as much as $15 billion of bonds this year in light of the investor demand for Qatar’s recent issue, report Bloomberg’s Ambereen Choudhury, Dinesh Nair, and Ruth David.

This would be Saudi Arabia’s first bond sale in international capital markets.

People with knowledge of the situation who asked not to be identified told Bloomberg that Saudi Arabia may copy Qatar’s $9 billion sale from earlier in May by issuing bonds with five-, 10-, and 30-year maturities.

They added that no final decision has yet been reached and that talks are still in early stages.

The kingdom has been struggling with the reality of lower-for-longer oil prices and has been looking for ways to generate funds. Even though the commodity’s prices have rebounded this year to around $49-50 per barrel, they are still far below June 2014’s peak of $100 a barrel.

Most notably, Deputy Crown Prince Mohammed bin Salman recently unveiled a plan, called Vision 2030, which aims to curtail the Saudis’ “addiction” to oil.

Moreover, while some economists remain firm in their belief that the Saudis will not abandon their currency peg to the US dollar, Zach Schreiber, the CEO of PointState Capital who made $1 billion betting against oil two years ago, recently announced that he was short the riyal against the US dollar.

He thinks ongoing low oil prices and growing costs will ultimately lead the kingdom to abandon its three-decade-old peg. (And should that happen, a Bank of America Merrill Lynch global-commodities research team thinks oil will crash to $25 a barrel.)

As for Qatar, although the Gulf state has weathered lower oil prices far better than its OPEC peers, some analysts are now starting to see warning signs flashing. Specifically, folks are worried that Qatar’s credit boom looks increasingly unsustainable and could lead to instability in the future.

Check out the full report at Bloomberg.