Saudi Arabia leads GCC bond market with $37bn issuance in H1

RIYADH: Saudi Arabia emerged as the top issuer in the Gulf Cooperation Council bond market during the first half of 2024, raising $37 billion through 44 issuances, according to recent data. 

The Markaz GCC Bonds and Sukuk Market Report indicated that this figure marks a 12.5 percent increase from the same period last year, representing 49 percent of the total new supply of GCC bonds and sukuk.

The overall value of GCC primary issuances reached $75.5 billion during this period, up 38 percent from $54.8 billion in the first half of 2023, with the number rising to 173 from 130. 

Saudi Arabia’s Vision 2030 includes several megaprojects that require substantial funding. While the Kingdom’s banks have traditionally relied on deposit growth as their primary funding source, the scale of these projects exceeds their liquidity capabilities.

Consequently, these banks are expected to seek additional deposits and access the international debt market to meet their financing needs. Additionally, these projects receive significant support from the central government and related entities. 

The Public Investment Fund has announced plans to deploy $70 billion annually after 2025 and is considering its own fundraising initiatives. 

Samer Jumean, partner and head of infrastructure at KPMG in Saudi Arabia, said in a Bloomberg interview an immense scale of financing is required, noting that while liquidity remains available, accessing capital markets is prudent. 

Despite these ambitious funding needs, Saudi banks’ balance sheets are still considered healthy, with S&P Global Ratings assigning investment-grade ratings and stable outlooks to most key lenders. They may not be able to shoulder the entire financial burden of Vision 2030 on their own, however.

Debt issuances by geography 

According to the Markaz report, the UAE followed Saudi Arabia in terms of value, raising $20.6 billion through 65 issuances during the first half of 2024, compared to $15.4 billion from 58 issuances during the same period last year. This represented 27 percent of the total value of primary GCC bonds and sukuk issuances. 

Qatari entities were the third-largest issuers within the GCC, with $10.5 billion, marking a 416 percent increase from the same period last year. 

Bahraini institutions raised $3 billion through 4 issuances, capturing 4 percent of the market while Omani entities secured $1.7 billion, representing 2 percent of the total.