Saudi NDMC Keeps Sovereign Domestic Sukuk Issuance Momentum Going in May with US$1.53bn Issuance Bringing Total Raised in January-May 2020 to US$10.13bn

The National Debt Management Center (NDMC) of the Saudi Ministry of Finance (MoF) continued its proactive domestic sovereign Sukuk issuance in May when it issued its fifth consecutive monthly Sukuk issuance in 2020 to date, raising SR5,755 million (US$1,531.34 million) in two tranches in the process.

This follows the third and fourth monthly Sukuk offerings in March and April which raised a combined SR21,117.5 million (US$5,616.28 million) respectively.

The latest offering comprised a two-tranche issuance totalling SR5,755 million (US$1,531.34 million) on 14 May consisting of:

  1. i) A 5-year Tranche 1 totalling SR3,805 million (US$1,012.47 million) maturing on 23 March 2025 and priced at a profit rate of 2.17% per annum and a final yield of 1.76%. The auction attracted bids totalling SR6,549 million (US$1,744.27 million), and
  2. ii) A 10-year Tranche 2 totalling SR1,950 million (US$518.87 million) maturing on 23 March 2030 and priced at a profit rate of 2.69% per annum and a final yield of 2.38%. The auction attracted bids totalling SR10,296 million (US$2,742.26 million).

These issuances similarly saw robust investor demand with total bids amounting to SR16,845 million (US$4,486.53 million).

The Saudi NDMCs has a multi-prong government-debt raising strategy comprising raising more funds from the financial markets including through increased domestic and international Sukuk issuances in addition to international conventional bonds and drawing on their sovereign wealth fund (SWF) assets. The Kingdom is by far the single most proactive sovereign domestic Sukuk issuer.

There is no doubt that the Kingdom is feeling the health and economic impact of the Coronavirus (Covid-19) pandemic which necessitated the introduction of a SR120 billion (US$31.91 billion) COVID-19 Mitigation Package. This has further been exacerbated by the sharp fall in crude oil prices and in the Kingdom’s oil production following an arrangement with fellow producer Russia in April. The MoF’s 2020 Calendar of Local Sukuk Issuances envisages 12 consecutive monthly issuances of Saudi-riyal denominated sovereign Sukuk. No other jurisdiction is committed to such a dedicated domestic Sukuk issuance regime. In the first five months of 2020, according to MoF data, the NDMC issued consecutive monthly issuances, raising a total SR38,088.5 million (US$10,134.94 million) in the process.

The continued traction and upward growth trajectory of Saudi domestic Sukuk issuance, driven by robust investor demand and the emergence of tenors of up to 30 and 40 years, is underlined by the fact that the total funds raised in the first five months of 2020 is just over half of the total raised for the whole year in 2019.

The NDMC issued twelve consecutive monthly domestic Sukuk from January to December 2019 with an aggregate annual volume of SR69,839 million (US$18,610 million). This is a staggering SR23,054 million (US$6,150 million) year-on-year increase on 2018. The MoF also raised US$2,500 million through an international Sukuk in 2019, thus bringing the US dollar equivalent raised through Sukuk to US$21,110 million.

In addition, the Kingdom also issues conventional bonds as part of its diversified fund-raising strategy. On 16 April, the Kingdom issued a US$7,000 million conventional bond under its Global Medium-Term Note Programme – its seventh international bond to date and its second one this year following a US$5,000 million three-tranche multi-tenor offering in January.

Saudi Sovereign Domestic Sukuk Issuance January-May 2020

Issuance Date


Maturity Date


Profit Rate/ Final Yield

Total Bids


22 January

Tranche 1 – SR715m

Tranche 2 – SR6,005m

27 January 2027

23 March 2030

7 years

10 years

2.47% pa/ 2.47%

2.69% pa/ 2.82%


19 February

Tranche 1 – SR508m

Tranche 2 – SR3,988m

27 January 2027

24 February


7 years

15 years

2.47% pa/ 2.35

3.00% pa/ 3.00%


25 March

Tranche 1 – SR169.5m

Tranche 2 – SR504m

Tranche 3 – SR14,894m

23 March 2025

23 March 2030

30 March 2050

5 years

10 years

30 years

2.17% pa/ 1.83

2.69% pa/ 2.64%

3.68% pa/ 3.68%


22 April

Tranche 1 – SR1,300m

Tranche 2 – SR4,250m

27 January 2027

24 February


7 years

15 years

2.47% pa/


3.00% pa/ 3.06%


13 May

Tranche 1-SR3,805m

Tranche 1 – SR1,950m

23 March 2025

23 March 2030

5 Years

10 Years

2.17% pa/ 1.76%

2.69% pa/ 2.38%


Total First Five Months 2020

SR38,088.5m $10,134.94m


11 years average

2.59% pa/ 2.55% average



Source: Compiled by Mushtak Parker from Data of National Debt Management Center, Saudi Ministry of Finance    May 2020

All the Kingdom’s sovereign domestic Sukuk issuances come under the unlimited Saudi Arabian Government Saudi Riyal (SR)-denominated Sukuk Programme, established on 20 July 2017 by the Ministry “to issue and offer, at its discretion, Sukuk in multiple issuances to investors, pursuant to the Royal Decree approving the National Budget.” The Programme, structured and lead arranged by Alinma Bank, according to the MoF, also comes as part of the DMO’s role in securing Saudi Arabia’s debt financing needs with the best financing costs and would contribute to the development of the Saudi Sukuk and Islamic Capital Market.

Just two days before the latest Sukuk offering on 12 May, Mohammad Al Jadaan, the Saudi Minister of Finance and Acting Minister of Economy & Planning, introduced new measures “to protect the Saudi economy and overcome the unprecedented financial and economic ramifications of the global coronavirus pandemic in the best way possible.”

The Minister emphasized that the crisis caused by the global pandemic resulted in three economic shocks, each of which could in itself have an extremely negative effect on the performance and stability of public finance had the government not intervened by taking measures to absorb them. These include the sharp decline in oil revenues, the main source of public revenues for the state budget, as a result of the lower oil prices. At end May the price of Brent crude oil futures stood at US$32.8/barrel. The measures taken to prevent the spread of Covid-19 has taken a huge toll on economic activity, which in term has impacted negatively on non-oil revenue and economic growth.

The third economic shock, according to Minister Al Jadaan, was the unplanned expenses that required government intervention by increasing provisions for the healthcare sector to support the preventative and treatment capacity of health services, in addition to the adoption a number of initiatives to support the economy, mitigate the economic effects of the pandemic and maintain jobs for citizens.

‏“These challenges combined,” explained Al Jadaan, “have led to a decline in public revenue and exerted pressure on public finances in a way that could not be dealt with later without causing harm to the overall economy of the Kingdom in the midsummer and long-term. Therefore, further reduction in expenditures is needed, as well as undertaking measures that support the stabilization of non-oil revenues.

‏These measures include the increase of VAT from 5% to 15% as of July 2020 and the discontinuation of the monthly cost-of-living allowance paid to Saudi public servants as of June 2020. “The impact of these measures in tandem with cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for initiatives of a number of Vision Realization Programmes of the KSA Vision 2030 and major projects for FY2020,” says the MoF, “will save the Treasury SR100 billion.”

‏“These measures that have been undertaken,” explained Minister Al Jadaan, “as tough as they are, are necessary and beneficial to maintain comprehensive financial and economic stability on the medium and long-term for the interest of the country and its citizens.”

Saudi Arabia in reality is way ahead in tapping the domestic sovereign Sukuk market, given that it has a well-established issuance infrastructure complete with a government policy framework under its Fiscal Balance Programme and Financial Sector Development Programme, whose objectives inter alia is to add to a diversified public debt fund raising strategy and to the development of the Saudi Sukuk and Islamic Capital Market.

However, it has been drawing down on its sovereign wealth fund assets in the Public Investment Fund, which is not a preferred option. Local bankers stress that local Sukuk issuances will continue to feature strongly as a public debt financing tool.

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