• Stability in the local money market after the announcement of the launch of «Aramco» .. SAIBOR at 2.23%


    It showed for "Al-eqtisadiah", the reaction of the movement "SAIBOR" for the four largest IPOs in the Saudi market during the 11-year-old was a minor and temporary.​

    ​The analysis of the reporting unit in Al-Eqtisadiah was based on historical Bloomberg data that measured the reaction of Saudi interest indicators and their interaction with major IPOs between 2003 and 2014, with the average rate of temporary increase for the “three-month” SAIBOR being 11 basis points. During the seven-day monitoring period of interest rate movement during, before and after the offering.​

    ​The most important Saudi interbank interest rates remained at their normal levels monitored at the end of last month, following Saudi Aramco's announcement that it intends to offer part of its shares, an indicator that reassures the "short-term" money markets of one of the largest IPOs expected in the local market in the coming period.

    SIBOR closed for three months, at 2.23 percent, the first week after Aramco announced its intention to list on the Saudi stock market.

    Historical IPOs

    With Cayan IPO," SAIBOR" was trading at 5.04 percent, reaching a high of 5.06 percent, but SAIBOR returned to normal within six days

    The subscription coverage in the shares of the National Commercial Bank offered to individuals amounted to 2307 percent, where the funds received amounted to 311 billion riyals.

    Unlike other IPOs in the Saudi market, which came at a time when "SAIBOR" prices are high, comes subscription "Aramco" and "SAIBOR" for three months, which is used widely with loans, has recorded declines since the beginning so far by 74 points based on "equivalent to 24.92 percent.​

    The total "Alsaybor" for example, during the period of subscription company "metal" levels of 3.63 percent.​

    Third Cut

    The Saudi Arabian Monetary Agency "SAMA" Bank late (October) last cut basic interest rates in the wake of the Federal Reserve Council "US Central Bank" to cut interest rates for the third time this year.

    It is known that most of the central banks around the world, which pegs its currency to the dollar, has cut domestic interest rates, joining the monetary easing cycle led by the Fed along with counterparts from the Gulf.

    The Saudi Arabian Monetary Agency (SAMA) lowered the repurchase rate used by banks to 225 basis points from 250 basis points and the reverse repurchase rate used in commercial bank deposits with the central bank by the same margin to 175 basis points.​

    ​SIBOR rates are the backbone of individual and corporate loans as well as some “floating rate” sovereign bonds in the domestic market, on the basis of which the interest/dividends paid by borrowers to banks are determined.

    It is calculated after 15 banks submit the interest rate and then the highest and lowest numbers are deleted and then we finish the interest rate.​

    When SIBOR rates rise, so does the profit margin of banks that lend to customers with variable interest rates. Only clients who choose fixed interest are immune to interest rate fluctuations.​

© All Rights Reserved for Asharqia Chamber