Saudi Arabia issues $17bn Islamic bonds after early repayment

Saudi Arabia has issued new sukuk (Islamic bonds) worth SAR64 billion ($17 billion) following the early purchase of over SAR63 billion of outstanding debt. 

The initiative aims to bolster the domestic market, the National Debt Management Centre (NMDC), which manages the Saudi government’s debt obligations and future maturities, said in a statement.

The new sukuk is divided into three tranches of SAR16 billion, SAR29.3 billion and SAR18.8 billion, maturing in 2031, 20234 and 2039, respectively.

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The initiative seeks to enhance the public fiscal in the medium and long term, NMDC said.

This month, the debt centre said order books for the new $5 billion sukuk reached $20 billion, an oversubscription of four times.

Sukuk are sharia-compliant bonds developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest and may finance businesses involved in activities not allowed under Islamic law.

• Emirates Islamic Bank’s green sukuk orders hit $1.9bn
• Demand is high for Alrajhi bank’s first green sukuk
• Growth doubts over Islamic finance despite trillions in assets

Islamic finance assets grew to about $3.3 trillion worldwide last year, but S&P warned this month that a planned industry standard could drive down sukuk issuance in 2025 and beyond. 

The credit ratings agency is predicting high single-digit growth in total assets in 2024-25 after an increase of 8 percent last year.