NDMC Sustains SAR-denominated Sovereign Sukuk Issuance in April 2025 with a 4-Tranche Offering Aggregating SAR3.71bn (USD989.19mn) Raising the Total in the First Months of 2025 to SAR13.14bn (USD3.51bn)
The National Debt Management Centre (NDMC) of the Saudi Ministry of Finance (MoF) continued its monthly Sukuk issuance momentum in April 2025 with a four-tranche aggregate issuance of SAR3,710.021mn (USD989.19mn) on 25 April. This compared to the March 2025 Sukuk issuance which raised SAR2,640.05mn (USD703.78mn).
Saudi Arabia is ahead in tapping the domestic sovereign Sukuk market for manifold reasons including an established issuance infrastructure complete with a government policy framework under its ‘Fiscal Balance Programme and Financial Sector Development Programme, whose objectives are to add to a diversified public debt fund raising strategy and to the development of the Saudi Sukuk and Islamic Capital Market.
Given the uncertainties relating to the tariffs announcements by the Trump administration and their potential global trade disruption, and the fall in oil and gas prices, governments such as Saudi Arabia are projected to experience budget deficits resulting in higher borrowing and debt accumulation. Tariff-related volatility and the early-April announcement of faster than-anticipated OPEC+ production cuts have put pressure on oil prices.
The Saudi debt capital market (DCM), according to Fitch Ratings in a report on 28 April 2025, is likely to cross USD500 billion outstanding in 2025, with fundamentals intact. “This,” says Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings, “is supported by the funding diversification across sectors, deficits and project financing under Vision 2030, and regulatory initiatives. However, the DCM is not immune from the surge in global volatilities, most recently caused by the US government’s tariff rises on 2 April. The primary dollar market has been relatively quiet since.”
The report confirmed that Saudi entities were the largest US dollar debt issuers in emerging markets (excluding China) in 1Q25, the largest DCM in the GCC, and the largest dollar Sukuk issuer globally.
The DCM reached USD465.8 billion outstanding at end-1Q25, up 16% yoy, with a Sukuk majority (60.4%), split mostly between US dollars (52.4%) and Saudi riyal issues (45.3%). Total DCM issuance in 1Q25 expanded by 202.4% to USD37.3 billion over the quarter but was down 20.5% from 1Q24.
An important development according to Fitch Ratings is that foreign investors account for a growing share of Saudi government local issuances, at 7.7% of the investor base at end-1Q25 (2024: 4.5%), but local banks remain the main investors (89.1%). Riyal issuance has been almost solely Sukuk across all sectors over the past five years.
On March 14, 2025, S&P Global Ratings also revised its long-term foreign and local currency unsolicited sovereign credit rating on Saudi Arabia to ‘A+’ from ‘A’. At the same time, the rating agency affirmed the ‘A-1’ short-term foreign and local currency unsolicited sovereign credit rating. The outlook is stable. “The stable outlook reflects our view that strong non-oil growth momentum and developing domestic capital markets balance risks from rising government and external debt to pursue Vision 2030 goals and debt servicing costs,” said S&P Global Ratings.
The April 2025 Saudi sovereign domestic Sukuk issuance of an aggregate SAR3,710.021mn (USD989.19mn) comprised:
i) A 4 -Year Tranche of SAR1,315.00mn (USD350.61mn) priced at a yield of 4.81% p.a. maturing on 23 January 2029.
ii) A 7 -Year Tranche of SAR80.00mn (USD21.33mn) priced at a yield of 4.85% p.a. maturing on 17 August 2032.
iii) A 11-Year Tranche of SAR765.01mn (USD203.97mn) priced at a yield of 5.01% p.a. maturing on 25 April 2036.
iv) A 14-Year Tranche of SAR1,550.011mn (USD413.27mn) priced at a yield of 5.11% p.a. maturing on 18 January 2039.
Total bids for the 4-tranche transaction on 25 April 2025 amounted to SAR3,710.021mn (USD989.19mn), the aggregate allocated amount.
The NDMC started the year 2025 with a four-tranche auction on 23 January 2025 which raised an aggregated SAR3,723.5mn (USD992.76mn). It continued its proactive sovereign Sukuk issuance momentum in the Saudi riyal-denominated domestic market in February 2025 with a 4-tranche transaction aggregating SAR3,070.772mn (USD818.82mn), and in March 2025 with an auction which raised SAR2,640.05mn (USD703.78mn).
The Kingdom has raised an aggregate SAR13,144.343mn (USD3,504.63mn) for the first four months of 2025 through Saudi riyal-denominated sovereign Sukuk issuances.
The NDMC finished the year 2024 with a flourish of activities resulting in an auction on 24 December 2024 amounting to SAR11,598.081mn (USD3,087.44mn) – its 12th consecutive monthly auctions of the year under its published issuance calendar and the NDMC’s SAR Sukuk Issuance Programme.
The Programme raised a staggering SAR71,680.33mn (USD19,095.71mn) in 2024; SAR45,610.582mn (USD12,159.11mn) in 2023 supplemented by an additional SAR35.9bn (USD9.57bn) through a standalone local currency Sukuk, bringing the total SAR-denominated Sukuk to SAR81.51bn in 2023; SAR86,491.29m (USD23,042.00mn) in 2022; SAR74,411.829mn (USD19,811.49mn) in 2021; and SAR50,393m (USD13,433.13m) in 2020 supplemented by an additional SAR34,645mn (USD9,236.77mn) through a standalone local currency Sukuk, bringing the total to SAR-denominated Sukuk to SAR85,038mn (US$22,638.35mn) in 2020.
These pertain to local currency Sukuk issuances and do not include the NDMC’s forays into the international Sukuk market and syndicated Murabaha markets. The NDMC Sukuk are all issued under the unlimited Saudi Arabian Government SAR-denominated Sukuk Programme, which focuses on fixed-rate instruments “to hedge against risks of potential interest rate fluctuations.”
These issuances, confirmed the NDMC, will continue in accordance with the approved 2025 Annual Borrowing Plan, to consider additional funding activities subject to market conditions and through available funding channels locally or internationally. This is to ensure the Kingdom’s continuous presence in debt markets and manage the debt repayments for the coming years while considering market movements and the government debt portfolio risk management.
The NDMC says it is committed to ensuring the Kingdom’s sustainable access to various debt markets to issue sovereign debt instruments at fair prices while maintaining prudent risk levels. To achieve this objective, it will continue to diversify financing channels throughout 2025. This diversification will include expanding financing through export credit agencies (ECAs), financing infrastructure projects, and exploring tapping into new markets in new currencies. These initiatives aim to expand the investor base and enhance the Kingdom’s access to global capital markets.
In January 2025, the Saudi Ministry of Investment’s updated investment rules also came into effect, which according to the NDMC will make it easier for foreign investors to invest in the Kingdom to attract more international investment by streamlining the process and creating a more investor-friendly environment. The ministry highlighted that the updated regulations would eliminate the need for many licenses and prior approvals, as well as significantly reduce paperwork and bureaucratic hurdles.
In this respect, the NDMC continues to work on attracting new capital, and more international financial institutions in addition to selected local banks to take part in the Primary Dealers Program, to capitalize on the debt instruments arranged by the NDMC. Already, BNP Paribas, Citigroup, Goldman Sachs, J.P. Morgan, and Standard Chartered Bank have signed up as new primary dealers in the government’s local debt instruments. They join five local institutions, namely Saudi National Bank, Saudi British Bank (SABB), Al Jazira Bank, Alinma Bank, and Al Rajhi Bank, already in the NDMC’s Primary Dealers Programme.