Good morning, ladies and gents. The week continues with strong M&A activity, with Salic and Alat snapping stakes in foreign companies. Meanwhile, FAB and BMI weigh in on the Kingdom’s growth prospects in 2025, and EFG Hermes’ Head of Research Ahmed Shams El Din discusses the Kingdom’s growing capital markets. Let’s dive in.

WEATHER- A chilly Riyadh is set for a 14°C high and a 7°C low today, while Jeddah’s mercury is set to peak at 28°C and hit a low of 20°C. Meanwhile, Dammam will see a high of 16°C, and a low of 13°C.

HAPPENING TOMORROW-

The US Special Envoy to the Middle East Steve Witkoff will be visiting the region this week to discuss the second phase of a Hamas-Israel hostage agreement, he told CBS. Witkoff plans to arrive Wednesday evening and spend five days visiting Saudi Arabia, Qatar, Egypt, Israel, and the UAE.

What’s in phase two? The second phase aims to establish a permanent ceasefire and ensure Hamas cannot return to government, Witkoff said. He added that there are discussions on the physical removal of Hamas from Gaza, though details regarding their destination remain undisclosed.

WATCH THIS SPACE-

#1- The Finance Ministry tapped HSBC, JPMorgan, and Societe Generale as global coordinators for a EUR-denominated sukuk issuance that can happen as soon as today, Bloomberg reports, citing a source it says is familiar with the matter. The offerings may include a seven-year green sukuk and a 12-year conventional sukuk, the source said. Additional details on yields and offering size were not disclosed.

This would be the government’s first green bond issuance. Proceeds will go toward financing the Kingdom’s green financing framework, unveiled last March. Projects under the framework focus on renewable energy, clean transportation, pollution prevention and control, sustainable water and wastewater management and climate change adaptation.

#2- PIF-owned Saudi Real Estate Refinance Company (SRC) will be out with its second international sukuk issuance within the next three months, as part of USD 5 bn in issuances lined up for this year, Municipalities and Housing Minister Majid Al Hogail told Al Arabiya.

REMEMBER- The move comes after the strong demand seen for the company’s recent USD 2 bn issuance that was 6x oversubscribed, and will be priced similarly to government bonds, Al Hogail added.

#3- Local contractors are conducting feasibility studies for the development of dry port facilities and a veterinary quarantine at Oman’s Economic Zone at Al Dhahira (EZAD), Aleqtisadiah reports.

The details: The Public Authority for Special Economic Zones and Free Zones (OPAZ) issued a tender last week for Omani and Saudi firms interested in the implementation of civil, mechanical, electrical, plumbing, and structural work for the port. The dry port will be operated by Oman Investment Authority subsidiary Asyad Group. The tenders are part of the third phase of a SAR 1.2 bn Saudi-funded infrastructure enhancement plan for EZAD.

BACKGROUND- The Saudi Fund for Development inked an agreement back in 2023 to finance the construction of EZAD’s infrastructure for SAR 1.2 bn (c. USD 319.9 mn). Saudi Arabia and Oman previously formed a committee to plan for the development of a new integrated economic zone in Dhahirah over an area of 388 sq km. The first phase of the zone will cover 20 sq km and is expected to boost trade with Saudi Arabia.

REMEMBER-Saudi and Omani business leaders gathered in Muscat earlier this month at the Saudi-Omani Joint Business Forum to increase investments between both countries.

DATA POINTS-

#1- The localization rate of Saudi Arabia’s engineering sector hit 39% in 2024, after surpassing its localization target for the year, Aleqtisadiah quotes Municipalities and Housing Minister spokesperson Seif Al Suwailem as saying. The sector localized 25k engineering and technical jobs in 2024, exceeding its initial target of 16k jobs, with 57k engineers, 105k technicians, and 9.8k women employed by the private sector.

#2- Saudi’s logistics sector attracted SAR 200 bn in private sector investments since the launch of the National Strategy for Transport and Logistics Services in mid-2021, Transport and Logistic Services Minister Saleh Al Jasser told Al Arabiya. The number of operational logistics centers also rose to 23, pushing the Kingdom up 17 places in the World Bank’s logistics index, with the Kingdom targeting 59 centers by 2030.

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THE BIG STORY ABROAD-

It’s shaping up to be a calm morning in international news, with the main focus on the Trump administration’s shift away from traditional EU allies to warmer ties with Russia.

US, EU not on the same page: US President Trump’s meeting with France’s Emmanuel Macron saw the two leaders interrupt each other a few times. Macron insisted Ukraine should be compensated by Russia as the aggressor, and corrected Trump’s statements that Europe “is loaning” the money to Ukraine and will get it back. Meanwhile, Trump said Washington is close to snapping up a share of Kyiv’s natural resources, with Ukrainian President Volodymyr Zelensky visiting in a few days to sign the agreement.

ALSO- Apple announced yesterday it will be investing USD 500 bn in the US over the next four years, in a bid to mitigate the impact of tariffs on its supply chains. Trump confirmed that postponed tariffs on Canada and Mexico “will go forward” when the delay expires next week.

MEANWHILE-

  • The EU agreed to partially lift sanctions on Syria’s energy sector, including oil exports and energy tech imports. (Bloomberg)
  • JP Morgan will allocate an additional USD 50 bn for direct lending. (Reuters)
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