Saudi Arabia surpasses $1bn sukuk milestone with May issuance

21/05/2025 02:54 AST

Saudi Arabia's National Debt Management Center has surpassed the $1 billion threshold in its latest sukuk issuance, raising SR4.08 billion ($1.08 billion) in May through riyal-denominated offerings.

This marks a 9.09 percent increase from April and reflects a significant 54.5 percent rise compared to March, when SR2.64 billion was raised.

The May issuance continues the Kingdom's strong momentum in the domestic debt market, following SR3.72 billion raised in January and SR3.07 billion in February. The consistent monthly issuances highlight growing investor interest in Shariah-compliant fixed-income instruments, as global financial markets adjust to a higher interest rate environment.

Sukuk, the Islamic equivalent of bonds, are structured to comply with Shariah principles, which prohibit interest-based transactions.

Instead, investors receive returns derived from partial ownership in tangible assets or investment activities, aligning with Islamic finance ethics.

According to the NDMC, the May offering was divided into four tranches. The first tranche amounted to SR489 million and is set to mature in 2029. The second was valued at SR1.004 billion and will mature in 2032. The third tranche, totaling SR1.28 billion, is due in 2036, while the largest portion of the issuance, worth SR1.3 billion, will mature in 2039.

Saudi Arabia's debt market has seen rapid growth in recent years, as domestic and international investors seek diversification and stable returns. A report released in April by the Kuwait Financial Center, also known as Markaz, noted that Saudi Arabia led the Gulf Cooperation Council's debt market in the first quarter of 2025. The Kingdom accounted for 60.2 percent of all primary debt issuances in the region, raising $31.01 billion across 41 offerings.

In a broader outlook, S&P Global highlighted Saudi Arabia's expanding non-oil economy and robust sukuk activity as key drivers of growth for the global Islamic finance sector.

The credit rating agency forecast global sukuk issuance could reach between $190 billion and $200 billion in 2025, with foreign-currency issuances potentially totaling up to $80 billion, assuming stable market conditions.

Furthermore, a December 2024 report by Kamco Invest projected that Saudi Arabia will lead the GCC in bond maturities over the next five years. Between 2025 and 2029, approximately $168 billion in Saudi bonds are expected to mature, underscoring the Kingdom's dominant position in the region's debt landscape.

Arab News