The National Debt Management Center in Saudi Arabia announced the completion of the investor subscription period for the May 2024 local issuance, under the Kingdom's government sukuk program in Saudi riyals. The total allocation to investors reached SAR 2.418 billion, reflecting strong confidence in the resilience of the Saudi economy and the strength of government debt instruments.
Release Segments Details
According to the official statement issued by the center, the issuance was divided into five different tranches in terms of maturity dates to meet the various strategies of investors, and the details are as follows:
- The first tranche: worth 348 million riyals, due in 2031.
- The second tranche: worth 35 million riyals, and due in 2033 AD.
- The third tranche: worth 1.010 billion riyals, due in 2036 AD.
- The fourth tranche: worth 1.015 billion riyals, due in 2039 AD.
- The fifth tranche: worth 10 million riyals, due in 2041 AD.
General context and role of the Sukuk program
This issuance comes as part of the Kingdom’s ambitious fiscal strategy stemming from Saudi Vision 2030, which aims to diversify the sources of funding for the state budget and reduce reliance on oil revenues. The government sukuk program is a key instrument for achieving these objectives, contributing to the development of the local debt market, providing secure investment channels for local financial institutions, and promoting financial inclusion. The National Debt Management Center was established in 2015 as the executive arm of the Ministry of Finance to secure the state’s financing needs at the best possible costs in the short, medium, and long term, while managing risks with high efficiency.
Economic importance and expected impact
Domestically, these periodic issuances contribute to financing major development projects in the Kingdom, such as NEOM, the Red Sea Project, and Qiddiya, in addition to supporting non-oil sectors. They also provide a benchmark for pricing private sector debt issuances, encouraging companies to utilize the sukuk market to finance their expansions, which enhances the depth of the Saudi financial market (Tadawul).
At the regional and international levels, the Kingdom's consistent issuance of sukuk reinforces its position as the world's largest Islamic finance market. These instruments attract international investors seeking Sharia-compliant investments with high creditworthiness, reflecting international confidence in the stability of the Saudi economy and its ability to meet its financial obligations, and solidifying the Kingdom's role as a pivotal player in global financial markets.
