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Saudi Arabia issues first-ever 30-yr local sukuk

Saudi Arabia issues first-ever 30-yr local sukuk
The volume of the 30-year sukuk issue amounted to SAR 11.619 billion

Riyadh – Mubasher: The Saudi Ministry of Finance’s (MoF) Debt Management Office (DMO) has completed the fourth issue of domestic sukuk this year, with the first-ever issuance of riyal-denominated Islamic bonds with a 30-year maturity.

“This additional reference point would be valuable for long-term financing pricing in the kingdom as a whole; it will support developmental and infrastructure projects, as well as public and private sector debt issuances,” the Saudi Press Agency (SPA) reported, citing the DMO’s statement on Thursday.

Demand for the new debt notes is equivalent to around SAR 9.25 billion ($2.47 billion), which is close to 80% of the oil-rich kingdom’s total debt issuance in April, the DMO noted. The volume of the issue amounted to SAR 11.619 billion.

Maturing in 2049, the new 30-year debt is projected to be used as benchmark to price mortgage and savings products, and provides a fresh investment product for long-term investors such as pension funds and insurance companies, it added.

The GCC nation’s debt maturities were previously limited at 10 years, but Riyadh issued debt with durations of 12 years and 15 years in February and March, respectively, according to Reuters.

“All of these isuances constitute a key pillar in supporting and developing the local debt market by building a yield curve,” the DMO said.

The kingdom’s ministry further explained that this issue is expected to attract long-term foreign investments and it copes with its programme to develop the financial sector as a part of Saudi Vision 2030.