By George Pavel, General Manager Middle East, Naga.com.
Saudi Arabia continues to attract strong investor demand in its debt markets, driven by an increasing diversification of issuers – whether it be the government, state-owned enterprises, or banks – using sukuk and bonds for their financing needs.
The momentum is visible across the board. In September, the Kingdom kicked off with a sovereign issuance of Ijara sukuk in two tranches totaling $5.5 billion, which attracted nearly $19 billion in orders. The PIF (Public Investment Fund) then placed a $2 billion 10-year bond, oversubscribed four times, while Aramco raised $3 billion through a dual-tranche sukuk, with a 5-year at 4.125% and a 10-year at 4.625%, with total demand exceeding $16.8 billion. Earlier this year, other heavyweights had already enlivened the market: Saudi Electricity Company with $2.75 billion, including a 10-year green sukuk, and Ma’aden with a first $1.25 billion sukuk, oversubscribed 9.2 times.
The banking sector has been particularly active. By the end of August, Saudi banks had already raised $9.5 billion, including $4.2 billion in AT1, a sign of balance sheet optimization in a context of strong credit growth. This momentum continued in September: Al Rajhi Bank raised $1 billion in a 10-year sukuk (5.65%), Bank AlJazira issued $500 million in AT1, and Almarai placed $500 million in a 5-year sukuk (4.45%), with orders reaching $2.1 billion.
Despite this buzz, the first half of the year showed a slight slowdown: $47.9 billion issued in 71 transactions, a 20% decrease year-on-year. Nevertheless, the strong oversubscription seen in sovereign issuances, public entities, banks, and large corporations continues to offer Saudi issuers efficient access to long-term financing, while providing international investors with quality exposure to the Kingdom’s key economic players.
