Saudi Arabia continues to assert its position as a financial powerhouse in international markets, as its latest issuance of dollar-denominated Islamic bonds, or sukuk, witnessed remarkable success, confirming investor confidence in the Kingdom’s economy.
Despite challenges facing international financial markets, Saudi Arabia has raised $5.5 billion from the sale of sukuk on strong demand.
The five-year Islamic debt was priced at $2.25 billion. The 10-year portion was priced at $3.25 billion.
The proceeds from the debt transaction attracted over $19 billion in orders.
According to Reuters, the five-year Islamic debt was priced at $2.25 billion with spreads set at 65 basis points over US Treasuries, tighter than the 95 bps indicative price guidance released Tuesday.
The 10-year portion was priced at $3.25 billion with spreads set at 75 bps, narrowed down from 105 bps.
Citi, HSBC, JPMorgan and Standard Chartered are the global coordinators and bookrunners for the debt sale, with ICBC and Mizuho banks acting as active joint lead managers.
According to Mohammed Al Farraj, who leads Arbah Capital’s asset management team, the exceptional demand for the issuance of sukuk points to a number of factors that have enhanced investor confidence and the attractiveness of this financial instrument.
“Chief among these factors is the Kingdom’s strong and stable credit rating, which reinforces investors’ belief in the Saudi economy’s ability to meet its financial obligations, making it a safe haven amid global market volatility.”
Al Farraj told Asharq Al-Awsat that “this confidence reflects an active and effective debt management strategy, as the National Debt Management Center has repurchased previous sukuk and restructured maturity timelines.”
“This sends a reassuring message about the Kingdom’s ability to handle its future obligations in an organized and planned manner,” he said.
He added that Saudi Arabia is now in a leading position alongside the world’s top players, which further strengthens its presence in the international debt market.
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