Saudi Arabia’s National Debt Management Center (NDMC) has successfully concluded the November issuance of its sukuk program denominated in riyals. The total bid amount for this issuance amounted to SAR2.67 billion ($710 million), which marks a decrease of 33.16 percent compared to the previous month of October.
The November issuance of sukuk was divided into two tranches. The first tranche, valued at SAR1.99 billion, is scheduled to mature in 2031. The second tranche, worth SAR668 million, will reach maturity in 2035.
Read more: Saudi sukuk and bonds jump by 5.7 percent this year
In October, the issuance of sukuk amounted to SAR3.98 billion. In September, the issuance was slightly lower, totaling SAR2.45 billion.
NDMC stated that this issuance reaffirms its previous announcement in February 2023. According to the approved Annual Borrowing Plan, the NDMC will continue to assess additional funding activities based on market conditions. These activities will be conducted through available funding channels, both domestically and internationally.Â
The center further highlighted that this initiative is aimed at securing the Kingdom’s ongoing presence in debt markets. It will enable effective management of debt repayments in the coming years, while also taking into consideration market dynamics and risk management of the government’s debt portfolio.
Sukuk, also known as Islamic bonds, are debt instruments that adhere to Shariah or Islamic laws when issued.
Strategic measure
In August, the NDMC implemented a strategic measure by restructuring SAR35.7 billion of debt instruments. This restructuring involved the creation of four new sukuk tranches with extended maturity periods spanning 2024, 2025, and 2026.
The initiative targets enhancing the resilience of the domestic money market and remaining aligned with its evolving landscape.
Despite the anticipated global decline in sukuk issuances in 2023, primarily due to ongoing economic transformation programs, Saudi Arabia’s sukuk issuance demonstrates its resolute commitment to effectively manage its financial requirements.
Largest market
According to a report published by Moody’s Investors Service in August, global sukuk issuances are projected to experience a decline in 2023. The estimated range for sukuk issuances in 2023 is between $150 billion and $160 billion, compared to $178 billion in 2022.
During that same month, Ayman Al-Sayari, governor of the Saudi Central Bank (SAMA), disclosed that the Kingdom boasts the largest Islamic finance market globally. The total assets of this market surpass SAR3.1 trillion.
Additionally, Al-Sayari noted that Saudi Arabia holds the distinction of being the foremost sovereign sukuk issuer on a global scale. Furthermore, he stated that the Islamic finance sector’s overall value presently amounts to SAR11.2 trillion, with an average growth rate of 9.6 percent over the past three years.
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