Saudi Arabia Prefunds 2027 Financing Needs with $3.25 Billion Dual-Tranche Sukuk
Saudi Arabia has issued a $3.25 billion dual-tranche sukuk, comprising five and 10-year notes, to prefund its 2027 financing needs. The deal was launched on Tuesday despite a gloomy market backdrop of escalating tensions in the region and higher global government bond yields.
According to Sudip Roy from IFR, the combined orders at launch exceeded $13.5 billion, demonstrating Saudi Arabia's continued appeal to investors. Daniel Wood, an EM portfolio manager at William Blair, attributed this to the kingdom's strong fundamentals, low debt levels, and resilient non-oil sector.
Faisal Ali, senior portfolio manager at Azimut, agreed that Saudi Arabia's credit profile is attractive due to its low sovereign debt burden, attractive credit spreads, and significant representation in global emerging market credit benchmarks. The sovereign stayed disciplined on pricing and size, tightening the two tranches by 30bp to land at plus 70bp and 80bp respectively.