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The Kingdom kicked off the sale of benchmark-sized USD-denominated sukuk with three-, six- and 10-year tranches, Reuters reported yesterday, citing fixed-income news service IFR. The government set initial guidance of 85 basis points over US treasuries for the three-year issuance, while sukuk maturing in six years are priced at 100 bps above US treasuries and those coming due in 10 years are at 110 bps. Bloomberg also has the story; both present the sale as part of a bid to “plug” a USD 21 bn funding gap this year.
ADVISORS- Citi, Goldman Sachs and BNP Paribas are bookrunners and global coordinators for the sale, while HSBC, Aljazira Capital, JPMorgan, and Standard Chartered were appointed passive joint lead managers and bookrunners on the offering.
Not the first time this year: The government sold USD 12 bn worth of USD-denominated sovereign bonds in January, marking Saudi’s largest issuance since 2017 when it sold USD 21.5 bn worth of bonds, according to data compiled by Bloomberg. The offering was 2.5x oversubscribed, with banks taking orders worth USD 30 bn.
Debt markets have plenty of appetite: Geopolitical tensions will not affect investor appetite for bonds, the managing director of fixed income advisory at Union Bancaire Privee told Bloomberg, adding that the Kingdom’s credit profile will remain stable on the back of oil price hikes despite rising debt levels and small fiscal deficits.
A bond bonanza at home: The Public Investment Fund (PIF) is reportedly considering more global bond sales and IPOs as it looks to ramp up the pace of investment as the Kingdom’s treasury prepares to run deficits through 2026 and pace out the implementation of some aspects of select Vision 2030 projects. The fund plans to ramp up annual deployment capacity to USD 70 bn a year starting 2026, up from a current annual spending clip of USD 40-50 bn. PIF has raised USD 7 bn since the start of the year from two debt sales.
Global bonds are the way to go: Officials at multiple levels of government and the PIF have repeatedly said in recent months that they don’t want to crowd private business out of the domestic debt market — and international appetite for the Saudi story is high.
