Saudi Arabia has advanced its plan to improve fiscal sustainability, maximise debt management, and expand the local debt market by completing a sukuk restructuring and new issuance of more than SR120 billion (USD 32 billion). The early redemption of government sukuk maturing between 2025 and 2029, valued at roughly SR60.4 billion, was the Kingdom’s sixth early repurchase transaction in the domestic market, according to the National Debt Management Centre.
The NDMC issued new sukuk totalling SR60.3 billion in five tranches with maturities ranging from 2032 to 2040 in order to refinance these obligations. In the face of regional and international uncertainty, the action bolsters Saudi Arabia’s larger Vision 2030 initiatives to diversify the economy, fortify fiscal buffers, and grow domestic capital markets.
“This initiative is a continuation of NDMC’s efforts to strengthen the domestic market and enables NDMC to exercise its role in managing the government debt obligations and future maturities,” the NDMC said, while adding, “This will also align NDMC’s effort with other initiatives to enhance/optimise the public fiscal in the medium & long term.”
The five tranches of the new sukuk issuance had different maturity dates. The first tranche matures in 2032 and has an approximate value of SR21.5 billion. The third tranche, which totals SR14.2 billion and matures in 2036, is approximately SR1.8 billion in value. The fifth and final tranche is approximately SR16.9 billion, maturing in 2040, while the fourth tranche is valued at SR5.9 billion and matures in 2039.
HSBC Saudi Arabia, SNB Capital, Al Rajhi Capital, AlJazira Capital, and Alinma Investment were appointed as joint lead managers by the NDMC and the Ministry of Finance, as the issuer, to facilitate the transaction.
A diversified financing strategy, the continued growth of the domestic market, and cautious, open risk thresholds for managing the debt portfolio all contribute to the Kingdom’s low-risk profile and current cost of debt, which is 3.6% annually, one of the lowest in emerging markets.