The August 2021 issuance under the Saudi Arabian Government SAR-denominated Sukuk program was closed by the National Debt Management Center (NDMC).
Saudi Arabia‘s August Sukuk Program
The bulk ups of the issues were separated into 3 tranches – an SR2.508 billion tranche maturing at 2029, an SR4.485 billion tranche maturing at 2033, and an SR4.365 billion tranche maturing at 2036.
By the end of 2020, the approximate debt outstanding which Saudi Arabia had accumulated was SR854 billion, out of which 59% was SR-denominated and 41% was in foreign currency.
According to the 2021 Saudi Arabian budget, the deficit financing requirement in 2021 was assessed to be SR141 billion. Despite the magnanimous budget deficit in 2020, a drop of 92% was recorded in the first half of 2021. This has improved the Kingdom’s credit rating.
A surge in oil prices, owing to the devastating effect of the COVID-19 pandemic, is said to help retrieve the Saudi economy to a better state.
The gross debt (around SR 124 billion) is being elevated by the Ministry of Finance. The debt raise is said to be split between domestic and external debt, largely unaffected from 2020, to fund this scarcity.
The means of financing will be a blend of orthodox bonds, Sukuk, and government substitute funding, and the remainder of expected scarcity will be funded through government capitals.
According to the 2021 budget declaration, the target portfolio for the ending of 2020 is anticipated to reach about SR937 billion, which interprets to about 32.7% debt-to-GDP proportion and a 75-85% fixed rate, which is in resonance with the government’s public debt management intentions.
