Good morning. This is our second-to-last issue before we head over to the long Eid weekend. Leading this morning’s news well is our rundown of the Kingdom’s Hajj preparations, and a few updates from our IPO landscape, as the (expected) slowdown is already stemming the flow of business news.

HAPPENING TODAY-

Riyad Capital’s PMI data is due out later today. Non-oil business activity in the Kingdom grew at its slowest rate in eight months in April, weighed down by a drop in new order growth as a “more challenging global environment” has affected demand.

WEATHER- Riyadh is expected to see a high of 40°C and a low of 28°C today, while Jeddah’s mercury will go as high as 34°C and as low as 28°C. Makkah will see a 41°C high and 31°C low.

PSAs-

The next round of e-invoicing: Companies that had more than SAR 3 mn in revenues subject to VAT in 2022 or 2023 will have to integrate their e-invoicing solutions with Zatca’s Fatoora platform by 30 June, Zatca said in a post on X. This is the latest phase of an e-invoicing rollout that began in late 2021.

WATCH THIS SPACE-

#1- UPDATE- Aramco completed its USD-denominated bond issuance under its global medium term note program, raising USD 5 bn from 25k bonds over three tranches, it said in a disclosure to Tadawul.

• Five-year bonds were priced at a 4.750% yield;
• 10-year bonds were priced at 5.375%;
• 30-year bonds were priced at 6.375%.

#2- Foreign Minister Faisal bin Farhan called out Israel for its “extremism and rejection of peace” after blocking an Arab ministerial delegation from the West Bank. Israel’s move “strengthens our will to double our diplomatic efforts within the international community to face this arrogance,” Bin Farhan added. Reuters also had the story.

IN CONTEXT- The delegation, which would have included Saudi Arabia, Jordan, Egypt, and Bahrain, planned to meet Palestinian President Mahmoud Abbas in Ramallah on Sunday, along with ministers from Qatar and the UAE, before Israel pulled the brakes. An Israeli official called the planned Arab ministerial meeting “provocative” and aimed at promoting Palestinian statehood.

Building up to New York: Saudi Arabia and France are co-chairing a UN conference in New York on the two-state solution between 17-20 June. The conference will address post-ceasefire security in Gaza, reconstruction, and establishing a Palestinian state.

ALSO- Bin Farhan touched down in Kuwait yesterday for the GCC Ministerial Meeting, where discussions focused on key regional and international developments — particularly the war in Gaza — and reviewed the progress of joint Gulf cooperation, state news agency SPA reported yesterday.

#3- Flyadeal slams Airbus for delivery delays: Homegrown budget carrier flyadeal called out Airbus for delays in delivering its narrow-body jets, calling them “inexcusable,” Reuters reports, quoting CEO Steven Greenway as saying on the sidelines of an IATA airline industry summit in New Delhi.

The details: The carrier was set to receive four aircraft in 1H 2025, and ended up receiving only two after multiple delays. The airline had placed an order of 10-wide-body A330neos earlier this year, with the first aircraft scheduled to be on the final production line in December 2026. However, Greenway expressed doubts on whether Airbus would commit to this timeline, or to the delivery of three aircraft scheduled for 4Q of this year.

SOUND SMART- A non-excusable delay — particularly in the aircraft industry — is a term coined to warrant specific penalties to airlines. Most carriers blame the delays on supply chain disruptions, arguing that makes the delays excusable, industry sources told the newswire.

Flyadeal is not the only disgruntled customer: Emirates CEO Tim Clark also criticized Boeing and Airbus for prolonged supply delays on the sidelines of the summit earlier this week, saying they are holding back fleet upgrades. Clark mentioned a six-year delay of the Boeing 777X delivery.

Airbus warned about delays: The France-based manufacturer alerted airlines last week to expect over a three-year delay for several deliveries, blaming it on continued supply chain disruptions. Airbus is planning to delay some deliveries to 2027 and 2028 amid mounting pressure to stick to its goal of delivering 75 of its flagship models each month. Other deliveries set for later in the decade are already being hit with six-month deferrals.

#4- Saudi Arabia still has fiscal space “to maneuver” amid twin deficits as debt remains below the self-imposed ceiling of 40% debt-to-GDP ratio, JP Morgan Senior Country Officer for MENA Khaled Hobballah told Bloomberg (watch, runtime: 5:59). The fiscal situation is backed by sizable buffers, solid reserves, and access to capital markets, Hobballah added.

Commenting on Tadawul’s April underperformance, Hobballah noted that the Saudi market is relatively expensive compared to other emerging markets, trading at a 15x forward price-to-earnings (PE) multiple — above the 12x average for emerging markets.

SOUND SMART-The price-to-earnings ratio — commonly known as PE or earnings multiple — is a benchmark that compares a company’s share price to its earnings per share. If the PE is too high relative to peers, investors may see the stock as overpriced and hold back on purchasing the stock.

ALSO- Falling oil prices are expected to weigh investment sentiment down, with JP Morgan forecasting a 10% drop to USD 66 a barrel in 2025 and to USD 58 in 2026. However, the impact of falling oil prices in the Kingdom is expected to be limited and cushioned by strong fiscal buffers.

LOOKING AHEAD- Hobballah anticipates an uptick in bond issuances at both the sovereign and corporate levels, citing favorable regional dynamics, resilience to global tariff headwinds, and a healthy IPO pipeline. While global tariffs are expected to have a limited direct impact, aluminum exporting countries (like the UAE) may be more exposed, as most regional trade remains concentrated with China and Europe.

#5- Al Modawat Specialized Medical is looking to transition to the main market Tadawul, after it listed a 20% stake on Nomu last year at SAR 111 apiece, it said in a disclosure to Tadawul. The healthcare player. The company’s share price fell 1.8% to SAR 17.1 on Monday’s close.

What it takes: To move from Nomu to the main market, a company needs to meet stricter requirements. It must have a minimum market cap of SAR 300 mn and a solid financial track record of at least three years under consistent management. The company also needs to offer at least 30% of its shares to the public, have at least 200 public shareholders, and follow more rigorous financial disclosure rules.

ALSO-East Gas Company (EGC) decided to pull the plug on its planned private placement offering of a 20% stake on Tadawul’s parallel market Nomu without citing specific reasons, according to a disclosure to the exchange. The offering was first announced in August 2024.

#6- Our medical device market is projected to grow at a 6% CAGR to SAR 12.3 bn (USD 3.3 bn) by 2029, driven by expanded healthcare coverage and continued investment in healthcare infrastructure, according to the latest report from Fitch Solutions’ BMI. While Fitch forecasts near-term economic growth due to increased oil production, the Kingdom’s reliance on oil revenues still poses a risk, as it may constrain public healthcare spending and impact medical device investment, the report read.

The medical device market remains heavily reliant on imports, which rose 6.8% y-o-y over the year ending February 2025 to USD 2.5 bn, while exports stood at around USD 80 mn over the same period, according to the report. Diagnostic imaging led growth, followed by categories such as ophthalmic instruments, blood pressure monitors, and hospital furniture.

DATA POINTS-

#1- Licensed hotel rooms in Makkah rose 41% y-o-y to over 300k in 1Q 2025, the spokesperson for the Tourism Ministry said in a post on X. The city now has more than 1.1k licensed hospitality facilities as authorities ramp up readiness efforts ahead of the hajj season, state news agency SPA reports.

#2- The General Authority for Competition issued 23 decisions on economic concentration requests received in May 2025, including 17 acquisitions, three joint ventures, and two mergers, it said in a post on X.

OIL WATCH-

Opec+’s decision to hike production in July is being interpreted differently by major banks, with Goldman Sachs and Morgan Stanley offering diverging forecasts on whether the group will extend its output increases beyond August, Bloomberg reported (here and here).

Goldman Sachs, which had expected a pause in August, now projects a fourth consecutive hike next month. The bank expects Opec+ to hold quotas steady from September onward as non-Opec supply rises and economic growth slows in 3Q, but it said risks are skewed toward more increases. Goldman maintained its Brent forecast at USD 60 a barrel for the rest of this year and USD 56 in 2026, with WTI trading at a USD 4 discount.

MEANWHILE- Morgan Stanley sees a different trajectory, expecting three more hikes through October, but noting the actual output is unlikely to match those targets. The bank highlighted that only two-thirds of May’s quota hike materialized and forecasts that the gap between quota and physical supply will persist, averaging only 50k bbl / d in additional actual barrels through year-end. The bank maintained its Brent forecast at USD 57.5 in 2H 2025 and USD 55 in 1H 2026.

Market reax: Brent futures for August climbed to USD 64.6 a barrel and WTI rose to USD 62.7 following Opec+’s last meeting, Bloomberg reported separately. The gains were supported by geopolitical tensions around Russia and Iran, which could limit additional sanctioned barrels from entering the market.

ALSO- Saudi Arabia and Algeria nip LPG prices again: Aramco and Sonatrach decided to reduce June’s official selling price (OSPs) for liquefied petroleum gas between 1.6% and 11.2% — compared to May — on the back of rising global supply, Reuters reports, citing traders. Aramco lowered its propane price by 1.6% to USD 600 per metric ton, and butane price by about 3.4% to USD 570.

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THE BIG STORY ABROAD-

Musk is still managing to still make the headlines after his step back from his chaotic foray into politics, with his xAI company looking to raise USD 5 bn in debt with a double-digit interest rate to build out the company’s AI infrastructure. The company behind social media platform X and AI chatbot Grok is also selling USD 300 mn worth of stock in a tender offer that values the company at USD 113 bn. (Reuters | Financial Times | Bloomberg)

Also ranking high on the world’s digital front pages are peace talks between Russia and Ukraine that give little hope that the war could soon come to an end. A second round of direct talks between the two nations in Istanbul ended with both sides trading ultimatums and agreeing only on limited humanitarian measures that included a prisoner swap. Russia demanded Ukrainian withdrawal from four regions and neutrality guarantees, while Ukraine called for a full ceasefire, US oversight, and the return of abducted children — of which Russia agreed to release just 10 from a list that Ukraine claims reaches 400. (Reuters | Financial Times | Bloomberg)

Meanwhile, leading the Guardian is a report claiming that Israel’s deadly strikes on schools used as shelters are part of a deliberate strategy. The depressingly familiar reports of strikes on schools have become a hallmark of Israel’s assault on Gaza, with the UN detailing in a report last month that 406 schools have been struck with a direct hit during the 19 month-long war — accounting for 72% of all the enclave’s schools. (Guardian)