Saudi Arabia raises $2.04bn through domestic sukuk issuance

By Amirtha P S, Desk Reporter
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Saudi Arabia’s National Debt Management Center has raised $2.04 billion through the sale of Sharia-compliant bonds, as the Arab World’s biggest economy looks to diversify its funding base.

The dual-tranche Saudi riyal-denominated issuance for the month of March is in line with the government’s domestic Sukuk program, the kingdom’s National Debt Management Centre (NDMC) said in its statement. The first tranche of $722 million will mature in 2028, while the second $1.32 billion tranche matures in 2031.

Saudi Arabia, which accumulates a huge portion of its revenue through the sale of hydrocarbons is currently working on a diversification strategy to expand its funding base following the Kingdom’s Vision 2030 economic agenda and its Fiscal Balance and Financial Sector Development programs.

In January the kingdom raised $1.82 billion through the sale of euro-denominated bonds, marking its second venture in the international bond market, after securing $5 billion from a two-tranche, US dollar-denominated offering.

Last month, Saudi Arabia’s minister of finance and acting minister of economy, Mohammed Al-Jadaan stated that the NDMC will proceed with the expansion of its investor base with a focus on developing and deepening the country’s domestic debt markets. Further, it seeks access to global debt markets as part of its risk management strategy and obtaining fair prices.

Saudi Arabia’s debt portfolio surged by $46.9 billion or about 26 percent, in 2020. The kingdom expects government borrowing to rise to about $249.3 billion by the end of this year, or more than 32 percent of gross domestic product, according to NDMC’s 2021 debt forecast.

Related: Global sukuk issuance to rise in 2021 following economic recovery: S&P