Saudi Arabia Raises $1.42 Billion Through July Sukuk Issuance

Saudi Arabia raised SR5.35 billion ($1.42 billion) through its July issuance under the Saudi riyal-denominated Sukuk Program, official data showed, as the Kingdom continues to finance long-term development projects and manage its debt portfolio.

The latest issuance was 49 per cent lower than the SR10.57 billion raised in June. The National Debt Management Center said the July offering was divided into five tranches with maturities ranging from 2031 to 2041.

The Shariah-compliant bonds form part of Saudi Arabia’s annual borrowing plan. The NDMC said the Kingdom would continue accessing domestic and international debt markets to meet its financing requirements, maintain a diversified investor base and manage the maturity profile of its outstanding debt.

Saudi Arabia’s Ministry of Finance expects the budget deficit to reach SR101 billion in 2026 as government spending continues on projects linked to the Vision 2030 economic diversification programme.

The sukuk issuance also comes as the International Monetary Fund forecasts Saudi Arabia’s economy will grow 3.6 per cent this year. The IMF expects stronger oil production and continued expansion in non-oil sectors to support growth, while investment under Vision 2030 is expected to remain a key driver over the medium term.

“Gulf sukuk programmes are more of a fiscal regime change than a funding exercise,” said Mohammad Nikkar, principal at Arthur D. Little. He said the programmes allow Gulf governments to support long-term infrastructure spending, attract Islamic investment and develop domestic yield curves needed for deeper capital markets.

The largest tranche in the July issuance was valued at SR3.83 billion and will mature in 2031. A second tranche worth SR515 million is due in 2033.

The third tranche, valued at SR204 million, will mature in 2036, while the fourth tranche of SR300 million is due in 2039. The final tranche, worth SR500 million, will mature in 2041.

Saudi Arabia has maintained a regular issuance schedule in domestic and international debt markets as lower oil prices and high spending on major projects continue to shape government financing needs.

Earlier this month, the NDMC redeemed SR17.1 billion in domestic sukuk before maturity and issued SR17.2 billion in replacement sukuk across five tranches. The transaction extended the government’s debt maturity profile to 2041.

The Kingdom raised SR10.57 billion through sukuk issuances in June, while May’s issuance totalled SR2.41 billion and April’s reached SR16.94 billion.

The latest offering highlights Saudi Arabia’s continued use of the sukuk market as a central part of its borrowing strategy while it balances development spending, fiscal requirements and long-term debt management.