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Kuwait central bank checks banks’ liquidity for anticipated bond launch

Release aims to finance projected deficit in country's budget, which was hit by plunge in crude oil prices

The central bank of Kuwait contacted policy makers and liquidity regulators at the country’s local banks to check on their available liquidity for a possible launch of government-sponsored bonds or treasury bonds, Al-Rai daily has learned from informed sources.

The anticipated release of bonds aims to finance a projected deficit in the Gulf country’s budget, which was hit by the plunge in crude oil prices in international markets.

The sources said the discussions touched on the size of excess reserves at local banks, which they can use to finance the new bonds without having to liquidate any assets or seek borrowing from third parties or even affecting the bank’s fiscal dues.

According to the sources, some banks said they were ready to contribute roughly KWD100 million to KWD150m in the anticipated issuance, while another bank said it was ready to offer KWD330m.

The sources said the banks will take into account that Kuwait is currently living a boom. When it comes to mega development projects, the country will launch a major refinery, among others. For local banks, financing such ventures offer low-risk investments.