Saudi Arabia issues $17 billion sukuk, diversifies funding sources

Saudi Arabia recently announced the issuance of new sukuk valued at SR64.1 billion ($17.09 billion), with the National Debt Management Center of Saudi Arabia overseeing the process. This move follows the early purchase of over SR63.1 billion of existing debt, demonstrating the country's commitment to managing its financial obligations effectively.

The newly issued sukuk is a Shariah-compliant debt product divided into three tranches. The first tranche, worth SR16 billion, is set to mature in 2031, while the second tranche of SR29.3 billion will reach maturity in 2034. The third tranche, valued at SR18.8 billion, is scheduled to mature in 2039, providing investors with various investment options.

The NDMC highlighted that this initiative aims to strengthen the domestic market and enhance its role in managing government debt obligations and future maturities. By issuing sukuk, Saudi Arabia is not only diversifying its funding sources but also contributing to the development of the Islamic finance market.

Earlier this year, the NDMC successfully completed a $5 billion international trust certificate issuance, which received significant market interest. In May, the Kingdom finalized its riyal-denominated sukuk issuance for the month at SR3.23 billion, further solidifying its position in the Islamic finance landscape.

Looking ahead, global sukuk issuance is projected to range between $160 billion and $170 billion in 2024, according to S&P Global. Fitch Ratings also anticipates continued growth in global sukuk issuance, driven by economic diversification efforts and the expanding debt capital market in the Gulf Cooperation Council region.

The issuance of new sukuk by Saudi Arabia reflects its commitment to prudent debt management practices and financial transparency. By tapping into the sukuk market, the Kingdom is not only meeting its funding needs but also contributing to the growth of Islamic finance globally. As the demand for Shariah-compliant financial instruments continues to rise, Saudi Arabia's strategic approach to sukuk issuance positions it as a key player in the evolving landscape of Islamic finance.