By Elias Al Helou

Saudi Arabia issues $1.17 billion in sovereign sukuk across three tranches in June

The total volume of sukuk and bonds in Saudi Arabia increased by 5.73 percent during the third quarter of 2023

The Sukuk issuance was divided into three tranches.

Published: Wed 26 Jun 2024, 2:33 PM

The National Debt Management Center in Saudi Arabia has announced the closure of the June 2024 issuance under the Saudi Arabian Government SAR-denominated Sukuk Program. The total amount allocated for this issuance was set at SAR4.414 billion ($1.17 billion).

The Sukuk issuance was divided into three tranches. The first tranche has a size of SAR1.6 billion and matures in 2027. Additionally, the second tranche has a size of SAR53 million and matures in 2031. Meanwhile, the third tranche has a size of SAR2.761 billion and matures in 2034.

The total volume of sukuk and bonds in Saudi Arabia increased by 5.73 percent during the third quarter of 2023, amounting to approximately SAR752.76 billion, compared to SAR711.94 billion at the end of the same quarter in 2022.

The listed sukuk and bonds accounted for the largest share of the total, equivalent to 71.03 percent.

The total volume of listed sukuk and bonds increased by 4.59 percent, rising from SAR511.25 billion in the third quarter of 2022 to SAR534.72 billion in the same quarter of 2023.

Meanwhile, the total volume of unlisted sukuk and bonds increased to SAR218.04 billion by the end of the third quarter of 2023, up from approximately SAR200.69 billion at the end of the third quarter of 2022, marking an increase of 8.65 percent.

The volume of sukuk and bonds relative to gross domestic product reached 19.06 percent in the third quarter of 2023, down from 19.97 percent in the same quarter of 2022.

The Corporate Sukuk and Bonds Index rose 0.33 percent to 996.88 points, while the Government Sukuks and Bonds Index declined 4.27 percent to 924.87 points. The Sukuks and Bonds Market Index also declined by 4.23 percent to 916.89 points.

What are sukuks and bonds?

Sukuk and bonds are financial instruments used by governments and corporations to raise money from investors for a set period of time. During this time period, the issuers of the sukuk or bonds make periodic coupon payments to investors, either at a fixed interest rate or a floating rate.

When the investment period, known as the maturity date, comes to an end, the issuers repay the original amount of money they raised from investors, which is called the principal.

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