Saudi Arabia tops GCC bond market with $37b issuance

Dubai: Saudi Arabia emerges as the leading issuer in GCC bond market by raising $37 billion (Dh135.8 billion) through 44 issuances during the first half of 2024.

This amount reflects a 12.5 per cent increase from the same period last year and represents 49 per cent of the total new supply of GCC bonds and sukuk, according to the Markaz GCC Bonds and Sukuk Market Report.

Overall, the GCC primary issuances reached $75.5 billion (Dh277 billion) during this period, marking a significant 38 per cent rise from $54.8 billion (Dh201 billion) in the first half of 2023.

Saudi Arabia's Vision 2030 initiative includes several large-scale projects requiring substantial funding, is a key driver behind these issuances. While the country's banks traditionally relied on deposit growth, the magnitude of these projects surpasses their liquidity capacities.

Therefore, these banks are anticipated to seek additional deposits and tap into the international debt market to fulfil their financing requirements. Notably, these projects benefit from substantial support from the central government and affiliated entities.

Looking ahead, the Public Investment Fund (PIF) has outlined plans to deploy $70 billion (Dh257 billion) annually post-2025 and is exploring various fundraising avenues of its own.

Despite these ambitious financial demands, Saudi banks maintain healthy balance sheets, with most key lenders holding investment-grade ratings and stable outlooks from the American credit ratings agency, S&P Global Ratings. However, they may not bear the entire financial burden of Vision 2030 independently.