The Kingdom of Saudi Arabia has sent banks a request for proposals for a potential US dollar bond, according to several sources.

The sovereign is expected to issue in the international capital markets sometime this year to fund a burgeoning fiscal deficit. Earlier this month, Saudi Arabia signed a $10 billion five-year bank loan, the government's first significant foreign borrowing for over a decade.

JP Morgan, HSBC and Bank of Tokyo-Mitsubishi coordinated the loan, which pays an all-in margin of 120bp.

Saudi Arabia is rated A1 by Moody's, A- by Standard & Poor's and AA- by Fitch. All three agencies have cut the sovereign's ratings in recent months, with S&P downgrading it by three notches since October.  - Reuters