Another success in the public debt strategy
The National Debt Management Center in Saudi Arabia announced the successful closing of its February issuance of the Kingdom’s government sukuk program in Saudi riyals, with a total allocation of SAR 7.868 billion. This issuance is part of the Center’s annual plan to secure the Kingdom’s financing needs at the best possible cost and reflects the government’s continued commitment to developing and deepening the domestic debt market as part of its broader economic objectives.
Release Segments Details
According to the official statement issued by the center, the issuances were divided into five tranches with varying maturity dates, providing multiple options for investors and catering to their diverse investment strategies. The details of the tranches are as follows:
- The first tranche: Its value amounted to 1.176 billion riyals, and it is due in 2031 AD.
- The second tranche: Its value amounted to 1.387 billion riyals, and it is due in 2033 AD.
- The third tranche: Its value amounted to 1.598 billion riyals, and it is due in 2036 AD.
- The fourth tranche: Its value amounted to 510 million riyals, and it is due in 2039 AD.
- The fifth tranche: It is the largest in size, with a value of 3.197 billion riyals, and it is due in 2041 AD.
General context and role of the National Debt Management Center
The National Debt Management Center was established in 2017 with the primary objective of securing the Kingdom's financing needs on the best possible terms over the short, medium, and long term. These regular monthly issuances are part of a comprehensive strategy aimed at strengthening the local sukuk and bond market, a key pillar of the Financial Sector Development Program, one of the executive programs of the Kingdom's Vision 2030. This strategy seeks to diversify the sources of funding for the state budget and reduce reliance on oil revenues, in addition to providing secure investment channels for local financial institutions such as banks, pension funds, and insurance companies.
Economic importance and expected impact
This offering is of great importance both domestically and internationally. Domestically, it contributes to deepening the local currency debt market and provides stable investment instruments that support liquidity in the financial system. It also helps establish a benchmark yield curve for the Saudi riyal, which is essential for pricing future debt issuances by the private sector, thus encouraging companies to finance their expansion projects through debt markets rather than relying solely on bank loans.
At the regional and international levels, the success of these successive issuances reinforces international investors' confidence in the strength and financial stability of the Saudi economy. It also underscores the efficiency and transparency of public debt management in the Kingdom, which positively impacts the Kingdom's credit rating and reduces future borrowing costs. The strong demand for these sukuk is a testament to the attractiveness of the Saudi market as a leading investment destination in the region.
