Saudi Arabia Raises $5.5B Sukuk Amid $19B Investor Demand

Saudi Arabia has raised $5.5 billion through a two-part dollar-denominated sukuk issuance, with investor demand far exceeding the offer size, reaching between $15 billion and $19 billion in orders. The sukuk, structured to comply with Islamic law by involving real assets rather than interest, was divided into a $2.25 billion five-year tranche and a $3.25 billion ten-year tranche, with spreads ranging from 65 to 105 basis points over US Treasuries. This bond sale supports Crown Prince Mohammed bin Salman's Vision 2030 initiatives, including giga-projects like Neom, and reflects the kingdom's ongoing efforts to finance economic diversification despite weaker oil revenues and a widening fiscal deficit. Saudi Arabia's international bond issuance for 2025 is on track for a record year, nearing $20 billion and surpassing the full-year total for 2024, while the country's debt-to-GDP ratio is projected to rise to about 41% by 2030. Despite fiscal headwinds and a projected deficit between 2.3% and 4% of GDP, investor appetite remains strong, underpinned by Saudi Arabia's ample reserves and relatively resilient fiscal position. Major global banks including Citigroup, HSBC, JPMorgan, and Standard Chartered led the deals, attracting both local and international financial institutions.