Saudi Arabia raised SR3.41 billion ($910 million) through its November sukuk issuance, marking a 28.19% annual increase. In October, the Kingdom issued sukuk worth SR7.83 billion, while September and August saw SR2.6 billion and SR6.01 billion raised.
Sukuk, or Islamic bonds, provide investors partial ownership of issuer assets until maturity, ensuring compliance with Shariah principles.
Moody’s reported that sukuk markets will remain robust in 2024, with global issuances estimated between $200 billion and $210 billion. This projection reflects an increase from just under $200 billion in 2023, underscoring growing demand for Shariah-compliant financial products.
Breakdown of November Sukuk Tranches
The November sukuk issuance comprised five tranches, according to Saudi Arabia’s National Debt Management Center (NDMC). The first tranche, worth SR2.52 billion, will mature in 2029, offering investors medium-term opportunities within the market. The second tranche, valued at SR434 million, matures in 2031, while the third tranche of SR137 million matures in 2034.
NDMC stated that the fourth tranche, sized at SR10 million, is set to mature in 2036, targeting long-term investors. The fifth tranche, worth SR310 million, will mature in 2039, completing the issuance’s diversified maturity schedule.
Global and Regional Drivers for Sukuk Growth
Fitch Ratings noted sukuk issuances have surged due to improved financing conditions after the Federal Reserve’s September rate cuts. Global sukuk outstanding reached $900 billion by Q3 2024, reflecting an 8.5% annual increase, according to Fitch’s October report. Interest rates are expected to fall to 4.5% by year-end and 3.5% in 2025, likely boosting short-term sukuk issuance.
Vision 2030 and Islamic Finance Leadership
Saudi Arabia’s steady sukuk activity highlights its commitment to growing Islamic finance, a cornerstone of its Vision 2030 strategy.
The Kingdom’s leadership in this space ensures its position as a key player in global Islamic finance and economic diversification efforts.
