Saudi Arabia: Debt issuance ramps up to finance infrastructure projects

GCC governments have issued about $45 billion in bonds and sukuk so far this year, putting the region’s sovereigns on track for the most debt issuance since 2020. The volume has increased drastically this year, with the first half of 2024 alone reaching well above the $33 billion issued in the whole of last year. 

Oil prices have averaged $83 per barrel so far this year, similar to the average for last year, and several countries that have issued bonds and sukuk this year are expected to run budget surpluses in 2024, including Abu Dhabi and Qatar. For these issuers, the capital was raised not to finance regular budget spending but to build a benchmark yield curve against which corporates could more efficiently price their debt, and in the case of Qatar, to fund environmentally friendly projects specifically. The sums raised were relatively small: Abu Dhabi raised a total of $5 billion in three tranches of five, 10 and 30 years, while Qatar issued its first-ever green bond of $2.5 billion across five and 10-year tranches.

The bulk of sovereign debt issuance so far this year has been from Saudi Arabia, which has raised over $35 billion in bonds and sukuk year-to-date, more than three-quarters of total GCC sovereign issuance. About half of this was in dollar-denominated debt. Last year, Saudi Arabia also accounted for 77 per cent of total GCC government bond and sukuk issuance.