Saudi Devaluation Odds Highest In 20 Years, Kingdom Now More Likely To Default Than Portugal

Tyler Durden's picture

On Monday, we brought you “Saudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos,” in which we outlined the jump in riyal forwards and widening of CDS spreads that Riyadh witnessed in the aftermath of the kingdom’s move to cut diplomatic ties with Iran.

In short: the market is getting worried that Riyadh is about to careen into crisis. In the face of slumping crude, the Saudis are staring down double digit budget deficits and the prospect of having to once again tap debt markets in order to offset the SAMA burn and keep the kingdom from having to implement further subsidy cuts.

The open hostilities with Iran all but guarantee the war in Yemen will escalate (just today for instance, Tehran accused the Saudis of bombing the Iranian embassy in Sana’a) and that entails a further drain on the kingdom’s finances as the monarchy will be forced to fund a prolonged and intractable struggle with the Houthis.

Additionally, the more tension there is between Riyadh and Tehran, the more fractious OPEC will become and with Iranian supply set to rise in the new year as international sanctions are lifted, this may well be one Mid-East conflict that drives oil prices lower rather than higher - especially if the SAR peg falls.

On Thursday, in the wake of a veritable meltdown in markets across the globe, riyal forwards hit their highest level in almost two decades as oil plummeted. As Bloomberg notes, “twelve-month forward contracts for the riyal climbed 260 points to 950 as of 3:49 p.m. in Riyadh, set for the steepest close since December 1996 [reflecting] growing speculation the world’s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986.”

Meanwhile, Saudi CDS spreads are now wider than those of Portugal. 

So just to drive the point home, Saudi Arabia, which entered 2015 with virtually no debt and an FX reserve war chest that amounted to around three quarters of a trillion dollars, is now viewed as less creditworthy than a country where a coalition of socialists, left-wingers, and communists just overthrew the government.

"Allahu Akbar"? 

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Croesus's picture

Hope the Kingdom gets Decapitated, fuck defaulting. 


Looney's picture

Wherever you look, everything is fake – fake wealth, fake money, fake purses, and faked orgasms.

Even the dude shot in Paris today wore a FAKE suicide belt! ;-)


Pliskin's picture

Pleease, for the love of Allah, don't forget fake breasts!?


Looney's picture

LOL! I hope you ain’t talking about them fake boobs matching the Adam’s apple, like Bruce Kardashian’s? ;-)


eforce's picture

I wouldn't be suprised if by the end of 2016 the Houthis are closing in on Riyadh going by the Saudi's performance in Yemen so far.

Latina Lover's picture

Saudi Devaluation Odds Highest In 20 Years

We can only dream.... imagine the demise of one of the most odious, criminal, disgusting regimes to have ever defiled the Earth.

Jtrillian's picture

It's all speculation until it actually happens.  Look at what the odds were with Greece and look at what actually happened.

Not saying it won't happen but there is a huge difference between speculating what might happen and what actually happens.  Try to stick to the facts and leave the speculation to the talking heads.  Facts will not lead you astray. 

Miles Ahead's picture

Dream?  When that happens your Dollar instantly turns to shit.  Be careful of what you wish for.

And Try to stick to the facts?  Stop speculating?  There are two ass-arrogant statements if I've ever seen two!

"Look at what the odds were with Greece and look at what actually happened."

Odds were on what exactly?  And what then actually "happened"?  Two nothing statements to boot.  Greece has collapsed.  Sold off to the highest bidder.  What... were you expecting a collapse into the ocean like Atlantis? 

If you were that wise to be advising others, you wouldn't be on ZH or any other chat boards!

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Miles Ahead Jan 7, 2016 1:36 PM

The dollar turning to shit is the only thing that will make America great again.

The 99.9% will become competitive in the world economy.

The cost of living will become affordable relative to the global wage average.

The 0.1% will not be as powerful abroad.

BiggerInJapan's picture

No state sponsored head cuting in Portugal, this is a important factor in evaluating a country worthiness, actually it was the first country in the world to abolish the death penalty, bad criminals should root in prision until the end. death is a reliefe for some that should not be granted.

Max Steel's picture

They will start selling it in Yuan.

emersonreturn's picture

LL & en, if as lumberjack posted on another previous ME thread is true (that the pilots flying over yemen were israeli) then SA doesn't have to worry about debt or electronic numbers.  it's entirely possible israel has decided to take on the quds in yemen.  simply another brick in the wall, each & every day WW111 escalates whilst the msm dissembles.  thank you tylers.

Miles Ahead's picture

See, this is a prime example.

Now we all hate Saudi Arabia... who has been doing our dirt and laundering our filthy money since 1971.  And in 2015 we forget all of that... just why?  What they are doing these days is STILL for us? 

But apart from that, it's clearly nothing, nothing to do with Islam.  It's Saudi Arabia, The Bush Family (and others) compliant Fiefdom in the desert.

SmedleyButlersGhost's picture

Don't forgive them either - horrid things.

clooney_art's picture

Good News about default !  These fuckers will now unleash even more terror worldwide to destablize other countries.

KnuckleDragger-X's picture

It comes down to how large the royal ego is, and right now they need a super tanker to haul it around. They are disconnected from the real world by a huge pile of money floating on a pool of oil, but nothing is forever, and goat herding and camel fornication will be making a big comeback........

MrNosey's picture
MrNosey (not verified) Croesus Jan 7, 2016 12:20 PM

Let's have a whip round, you have got to feel sorry for them poor head choppers.........NOT!


cheech_wizard's picture

What, no obligatory link? 

Standard Disclaimer: I, for one, am pleasantly surprised. <golf clap> See, it wasn't that hard, was it?



Abitcoinbrain's picture

allah akbar BURN the SAUDI sess pool to the ground fucking Camel humpers...... One by one we are eleminating all ARAB, Muslim and middle east powers ..... BYE BYE TO ANOTHER DESERT FUCK!!!!



Miles Ahead's picture




Got your work cut out for you ape. ("cess pool") LOL...

Hope Copy's picture

Aye,  watch what you say..  no one really wants hear (read) the truth

fajensen's picture

Maybe they should hire Mc Hammer as financial advicer?

Lumberjack's picture

And even with sanctions, Russia is winning! 

css1971's picture


Someone knows something.

DontFollowMyAdviceImaDummy's picture

couldn't happen to a nicer country... ~/s

FreeShitter's picture

The Great motherfucking Reset is coming forget the New World Order, that's been here.

Bangin7GramRocks's picture

So sad. That family of dictators will need to flee their sweaty desert homeland and live in exile at one of their 50,000 palatial residences scattered throughout the world. I'll bet the family might even run out of money before the sun goes dark in 4 billion years.

Lady Jessica's picture

Sorry to be pedantic but don't we get swallowed by the sun before it goes dark?

Miles Ahead's picture

It's OK, most of us don't know what pedantic is anyway.

The Saudis don't have to worry about where to flee, or 50K palaces.  There's a warm home waiting in London for every ex-dictator, deposed royal, terr'ist, ex-Soviet era oligarch.  With her blessings.

bonin006's picture

Estimates I have heard indicate we only have between 500,000,000 and 2,000,000,000 years before the expanding sun roasts and/or swallows us.

shovelhead's picture

The bright side is that look at all the new gold that will be created when we super-nova.

SmedleyButlersGhost's picture

The Saudi advance team is checking out Cologne as a possible haven if the SHTF.

BorisTheBlade's picture

Seems legit. Only thing for Cologne mayor left to endorse is pedophilia and bang, Saudi 'royalti' feel real comfy.

Herdee's picture

I only hope that the Saud family of head-choppers thar run the Wahhabism sect are targeted by the NeoCons that are waking up to the fact that these guys are at the core of terrorism financing and played a big role in 911. I say to all Americans that it's pay back time and they should take out this expanding problem once and for all.Both Bushs',Clinton and Obama have all been actors in a very sick play in order to allow this Saud family to accumulate massive amounts of American military hardware.Take'm out while you can,we now know that the scam of Iran being able to develop nuclear weapons was bullshit and all part of this Israeli-Saudi-Con-Game to expand the Saud family and its' perverted influence throughout the MiddleEast.

Jstanley011's picture

1) Give 24 hours' notice, then turn Mecca into a smoking hole to which the Muzzies can make pilgrimages and bow five time a day if they still think Allah Akbar.

2) Annex the country as an American protectorate.

3) Give exclusive rights to their oil to the highest bidder from among American-based oil companies.

If we're going to be an empire, by God, let's start acting like an empire.

cheech_wizard's picture

>let's start acting like an empire.

I don't think we in the U.S. know how, there's not exactly a manual to follow, only historical examples.

Somewhat Evolved Monkey's picture
Somewhat Evolved Monkey (not verified) Herdee Jan 7, 2016 12:31 PM

The Neocons know everything about Saudi Arabia. They just don't give a fuck. 


The US-Saudi relationship I have always found to be incredibly fascinating on a number of levels. 


People complain about women's rights in the west?


Women are barely tolerated in public in Saudi Arabia. Forget getting a job, or even driving a damn car.


The place is hell, and their strict militant form of Islam is nothing more than a device of population control.


What really irks me is the hypocrisy of these "kings." They party harder, and enjoy more luxury goods, then Paris Hilton! One prince just the other day got caught being an absolute animal to some women, I think it was out in California. The King himself will sometimes rent out an entire hotel on the beach just to relax there. How very religious of you!



BorisTheBlade's picture

Just google 'Saudi prince arrested', you'll find plenty of stories. These guys party like there's no tomorrow and perhaps they feel there isn't.

Many Muslims hate Saudi royalty, more than others are ordinary Saudis outside of royal and a score of other wealthy families, hence the need for medieval oppressive apparatus.

Demdere's picture

This is surely the most oblivious comment I have read in the new year.

Israelis and US are strong allies of SA.  Israeli-Neocons and SA and Turkey control ISIS.  SA funds it, Israeli provides Colonels to coordinate operations and military hospitals to treat its wounded, the US supplies it through Turkey, and Turkey transports and Israel buys ISIS oil and likely handles the $, tho I haven't seen that detail.

9/11 was a false flag operation by that group of allies.  Watch Sibel Edmonds Boiling Frog for her explanation of the Turkish-Israeli-US relations in all this.  Gladio B is, among other things, ISIS and other 'Islamic extremist groups', all being used for Israeli Greater Israel strategy, which intends to leave a very much enlarged Israel is the sole large and cohesive power in the ME and also the US strategy to knock out Russia and China and leave the US the sole dominant power in the world.

That can't work, but it can cause enormous trouble while they destroy the American empire and Israel also.



buzzsaw99's picture

the efficient usa market set those cds prices no doubt

we have what's known as a "price discovery mechanism" in the usa. that is to say that the fed gangsters set prices then you have to guess what they are. the price is wrong bitch. [/happy gilmore]

falak pema's picture

capitalism stands on its head; as Sauron just said.

And Sauron knows what capitalism is. (the type that WS plays).

"We are heading to a repeat of 2008" ... from the mouth of he that WEARS the ring of monetary Armageddon.

Element's picture



Their is no formal Military Alliance between Saudis and USA.

Saudi Arabia–United States relations - From Wikipedia, the free encyclopedia   
Saudi Arabia    
United States
"... Bilateral relations between the Kingdom of Saudi Arabia and the United States of America began in 1933 when full diplomatic relations were established. Despite the differences between the two countries—an ultraconservative Islamic absolute monarchy, and a secular, democratic republic—the two countries have been allies. [This is apresumption, there is no formal alliance] In recent years, the two countries have occasionally been described as having a Special Relationship with one another. U.S. presidents, George W. Bush and current president, Barack Obama have strong and close relations with senior members of the Saudi Royal Family. ..."


White House to Royal House. That's it! No formal state to state military alliance.

Foreign relations of Saudi Arabia - From Wikipedia, the free encyclopedia

"Saudi Arabia is a non-aligned state   ["NON-ALLIGNED" = NO WESTERN ALLIANCES] Although a member of the Non-Aligned Movement, Saudi Arabia has been described as leading the “Pro-Western Camp” of Arab countries, aligned with the U.S. and composed of Egypt, Jordan, and the Gulf states. Islam is the main religion of Saudi. ..."


Got that?  A "CAMP" ... no military Alliance.

Never confuse a Coalition with Alliance. They are not interchangeable, and they do not mean the same thing. One is a formal military arrangement with binding obligations, and the other is an ad-hoc arrangement that comes into being cooperatively around shared military security interests, and then dissipates. They are informal and cooperative

I this case there is just a special relationship between Royal House and White House.

That's it! Though they have acted in military coalition arrangements for many years, off and on.

There is no formal Alliance or Treaty between the USA and the Kingdom of Saudi Arabia, like the formal arrangement of the NATO Treaty and the ANZUS Alliance, etc.

There is nothing even resembles that with the Saudis. It is purely an arrangement between trading entities that serves each others needs, until it doesn't, backed by diplomacy, and Western military protection - for now.

It may continue, it may not.

And even that is now turning into a more commercially-driven weapons for oil trading arrangement, so that they can do their own protecting of themselves.

The big Anglo western states (US, CAN, Aust) are now all serious hydrocarbon producers, whereas 10 years ago they were not.

And now all of the major producers in the ME are also our 'coalition' partners, and we all have bases there.

But not actual allies. These are not the same thing. Saudis are not our allies, they operate within an ad-hoc mutually operated coalition.

There is no obligation to treat coalition partners as an ally. And we don't, and they don't

Now you know why Washington was not conferred with about air attacks commencing in Yemen.

The Saudis simply didn't have to, there is no obligation, it is their own private sovereign business.

Hence the Saudi attitude to Washington of late.

So all major ME producers except Iran, are more or less coalition partners now. they are expending weapons and need many more weapons as they expend them.

If the region is insecure the West sells arms.

If the oil is also insecure, the West can get a better oil and gas price, as well as a larger market share.

It is a fundamental error to think there is an Alliance here. There isn't one, and there never has been one.


There's this:

And hopefully no more.

Max Steel's picture

United States and New Zealand no longer maintain the security relationship between their countries.

Element's picture

hahaha!  Do you ever check before you stick your foot in it, moron?


New Zealand–United States relations - From Wikipedia, the free encyclopedia

New Zealand–United States relations refers to international relations between New Zealand and the United States of America. According to the U.S. State Department, relations as of August 2011 are "the best they have been in decades." New Zealand is a major non-NATO ally of the United States.

Both the United States and New Zealand share some common ancestry and history (having both been British colonies). Both countries had native peoples who were at times dispossessed of their land by the process of colonization. Both states have also been part of a Western alliance of states in various wars. Together with three other Anglophone countries, they comprise the Five Eyes espionage and intelligence alliance.

According to the 2012 U.S. Global Leadership Report, 56% of New Zealanders approve of U.S. leadership, with 23% disapproving and 21% uncertain.

ANZUS Treaty

The Australia, New Zealand, United States Security Treaty (ANZUS or ANZUS Treaty) is the military alliance which binds Australia and New Zealand and, separately, Australia and the United States to cooperate on defence matters in the Pacific Ocean area, though today the treaty is understood to relate to defence operations. While the ANZUS Treaty was once fully mutual between Australia, New Zealand and the United States, this is no longer the case due to New Zealand's ban of nuclear warships and the US's consequent suspension of treaty obligations to New Zealand.

New Zealand has fought alongside the United States in multiple conflicts, including in the Second World War, the Korean War, the Vietnam War, the Gulf War, and Afghanistan.

In May 2006, US Assistant Secretary of State for East Asian and Pacific Affairs, Christopher R. Hill, described the New Zealand anti-nuclear issue as "a relic", and signalled that the US wanted a closer defence relationship with New Zealand. He also praised New Zealand's involvement in Afghanistan and reconstruction in Iraq. "Rather than trying to change each other's minds on the nuclear issue, which is a bit of a relic, I think we should focus on things we can make work"

While there have been signs of the nuclear dispute between the United States and New Zealand thawing out, pressure from the United States increased in 2006 with US trade officials linking the repeal of the ban of American nuclear ships from New Zealand's ports to a potential free trade agreement between the two countries.

On an official visit to New Zealand in July 2008, when questioned on the issue of New Zealand Nuclear-free policy Secretary of State Condoleezza Rice stated that "US and New Zealand have moved on. If there are remaining issues to be addressed then we should address them".[8] She went on to say that: "New Zealand and the United States, Kiwis and Americans, have a long history of partnership. It is one that is grounded in common interests, but it is elevated by common ideals. And it is always defined by the warmth and the respect of two nations, but more importantly, of two peoples who are bound together by countless ties of friendship and family and shared experience."

On 21 September, visiting U.S. Defense Secretary Leon Panetta said Royal New Zealand Navy ships would be allowed onto Defence Department or Coast guard facilities both within the U.S. and elsewhere in the world. "These changes make it easier for our militaries to engage in discussions on security issues and to hold co-operative engagements that increase our capacity to tackle common challenges. [We will work together despite] differences of opinion in some limited areas." At the same time, however, New Zealand had not changed its stance as a nuclear-free zone.

On the 29th of October 2013 it was announced that "The United States and New Zealand will resume bilateral military cooperation after a near-total 30-year interruption" by New Zealand Defence minister Jonathan Coleman and United States Secretary of Defense Chuck Hagel.


Got any other stunningly ignorant and easily disproven bullcrap to impart there, numbnutz?