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Saudi Arabia is set to launch its first international bond to help shore up the country's finances in the wake of persistently low oil prices, says the Financial Times. Oil prices have dropped from highs in the triple digits in June 2014 to about $40 to $50 per barrel.
The FT, citing unnamed sources, said that Saudi Arabia is talking to international banks to start arranging a sovereign debt issue.
The size of the bond was not specified in the report.
The bond isn't the first round of borrowing for Saudi Arabia this year, as the country burns through its cash pile.
In April Saudi Arabia raised a $10 billion ($6.85 billion) bond from JPMorgan, HSBC and Bank of Tokyo-Mitsubishi in the form of a five-year loan, which was over-subscribed.
This loan will increase Saudi Arabia's debt levels from 7% of GDP in 2015 to 50% of GDP by 2020.
Saudi Arabia is desperate for cash because it is still heavily dependent on oil to bring in revenue.
Oil prices have dropped by 50% since June 2014 and that is hurting its budget deficit — the amount by which expenditures exceeded revenue.
Oil revenues make up 77% of the country's total revenue. Oil revenue is down by 23% on the previous year.
The HSBC analysts said that for the month of February, the country's foreign-exchange holdings dropped by more than $9 billion, falling to their lowest level in nearly four years, and are continuing their slide lower. Reserves had fallen by £14 billion in January.
The amount of reserve assets held by the Saudi government stood at $593 billion, more than $150 billion (£104 billion) down from its recent peak in late 2014.
As a result, for the second time in four months, the ratings agency S&P downgraded Saudi Arabia's debt rating, which makes it more expensive for Saudi Arabia to borrow money.
Saudi Arabia is now trying to curtail the kingdom's "addiction" to oil by implementing a planto diversify the economy, called "Vision 2030."

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