Saudi Arabia’s National Debt Management Center (NDMC) successfully completed its riyal-denominated sukuk issuance for September, raising SR2.603 billion ($690 million). This follows a trend of fluctuating sukuk issuances, with SR6.01 billion issued in August, compared to SR3.21 billion and SR4.4 billion in July and June, respectively.
The recent decline in sukuk issuances aligns with a Fitch Ratings report that predicted a slowdown in the third quarter, with expectations of a rebound later in the year due to lower interest rates and oil prices. Sukuk, also known as Islamic bonds, offer investors partial ownership of an issuer’s assets until maturity, while remaining compliant with Shariah law.
The NDMC’s September issuance was divided into six tranches:
- The first tranche, valued at SR255 million, will mature in 2027.
- The second, at SR375 million, will mature in 2029.
- The third tranche, worth SR638 million, will mature in 2031.
- The fourth tranche, the largest, is valued at SR1.02 billion and will mature in 2034.
- The fifth tranche of SR202 million will mature in 2036.
- The final tranche, valued at SR112 million, will mature in 2039.
The Kingdom’s Sukuk Issuance Program, launched in 2017, aims to establish an unlimited riyal-denominated Islamic bond initiative. Despite the recent slowdown, analysts anticipate a strong performance for the sukuk market in 2024. Moody’s projects issuance volumes will reach between $200 billion and $210 billion, driven by sovereign issuances across the Gulf Cooperation Council and Southeast Asia, with Saudi Arabia taking a leading role.