Latest news with #SR2.64
Arab News
22-04-2025
- Business
- Arab News
Saudi Arabia raises $990m through April sukuk issuance
RIYADH: Saudi Arabia's National Debt Management Center raised SR3.71 billion ($990 million) through its riyal-denominated sukuk issuance for April, reflecting a 40.5 percent increase compared to the previous month, according to an official statement. The amount marks a significant rise from March, when the Kingdom secured SR2.64 billion through sukuk. In previous months, Saudi Arabia issued SR3.07 billion in February and SR3.72 billion in January, continuing a trend of strong activity in the domestic debt market. Sukuk are Shariah-compliant financial instruments similar to bonds, offering investors partial ownership in an issuer's assets. They are structured to adhere to Islamic finance principles, which prohibit interest payments. According to the NDMC, the April issuance was divided into four tranches. The first tranche was valued at SR1.31 billion and is set to mature in 2029. The second amounted to SR80 million, maturing in 2032, while the third tranche, worth SR765 million, will expire in 2036. The largest portion, valued at SR1.55 billion, is due in 2039. The Kingdom's debt market has seen rapid growth in recent years, drawing increased interest from investors seeking fixed-income instruments amid a global environment of rising interest rates. Earlier this month, a report by Kuwait Financial Center, known as Markaz, revealed that Saudi Arabia led the Gulf Cooperation Council region in primary debt issuances in the first quarter of the year. The Kingdom raised $31.01 billion from 41 offerings, accounting for 60.2 percent of all issuances across the GCC during that period. In a separate development, global credit rating agency S&P Global said Saudi Arabia's expanding non-oil sector and healthy sukuk issuance levels could contribute significantly to the growth of the global Islamic finance industry. The agency projected global sukuk issuance could reach between $190 billion and $200 billion in 2025, with foreign currency-denominated issuances contributing up to $80 billion, provided market volatility remains contained. A report published in December by Kamco Invest further projected that Saudi Arabia would account for the largest share of bond maturities in the GCC from 2025 to 2029, with a total of $168 billion expected to mature during that period.
Arab News
23-03-2025
- Business
- Arab News
Closing Bell: Saudi main index edges down to close at 11,694
RIYADH: Saudi Arabia's Tadawul All Share Index slipped on Sunday, losing 65.55 points, or 0.56 percent, to close at 11,694.77. The total trading turnover of the benchmark index was SR2.64 billion ($704 million), as 85 of the stocks advanced and 155 retreated. On the other hand, the Kingdom's parallel market, Nomu, gained 13.93 points, or 0.05 percent, to close at 30,535.46. This comes as 36 stocks advanced while 48 retreated. The MSCI Tadawul Index lost 10.73 points, or 0.72 percent, to close at 1,479.47. The best-performing stock was Al-Babtain Power and Telecommunication Co., whose share price surged 9.98 percent to SR46.30. Other top performers included Alujain Corp., whose share price rose 8.65 percent to SR37.70, as well as Arriyadh Development Co., whose share price surged 6.05 percent to SR34.20. Naseej International Trading Co. recorded the most significant drop, falling 9.58 percent to SR84. Al-Rajhi Co. for Cooperative Insurance also saw its stock prices fall 4.63 percent to SR136. Banan Real Estate Co. also saw its stock prices decline 4.31 percent to SR6.22. On the announcements front, Tam Development Co. declared its annual financial results for the year ending on Dec. 31, 2024. According to a Tadawul statement, the firm reported a net profit of SR30.13 million in 2024, reflecting a 25.77 percent drop compared to 2023. The decrease in net profit is primarily attributed to delays in government project awards and budget reviews in the first half of 2024 which affected contract pricing revenue recognition and utilization rates as well as strategic investments in talent acquisition and competitive pricing to secure new logo accounts temporarily compressing margins. The drop was also linked to higher general and administrative expenses which increased 39 percent due to workforce expansion to support growth. Tam Development Co. ended the session at SR175.80, down 6.02 percent. Riyadh Steel Co. has also announced its annual financial results for the year, which ended on Dec. 31, 2024. A bourse filing revealed that the company reported a net profit of SR1.99 million in 2024, reflecting an 82.06 percent drop compared to 2023. This decline is owed to a reduction in selling prices, a decrease in other income, and higher expenses in comparison to the previous year. Riyadh Steel Co. ended the session at SR2.01, down 0.49 percent. Middle East Pharmaceutical Industries Co. has announced its annual financial results for the year, which ended on Dec. 31. According to a Tadawul statement, the firm reported a net profit of SR79.85 million in 2024, reflecting a 21.3 percent drop compared to 2023. This increase in net profit is primarily attributed to strong revenue growth and a higher gross profit margin, driven by product mix diversification and economies of scale from increased production. Nevertheless, the gain in gross profit was partially offset by higher selling, distribution, and general administrative expenses, which were largely due to ongoing investments in marketing, talent acquisition, and other growth-related initiatives. Middle East Pharmaceutical Industries Co. ended the session at SR135.40, down 1.34 percent. Alandalus Property Co. also announced its annual financial results for the year ending Dec. 31, 2024. A bourse filing revealed that the company reported a net loss of SR31.6 million in 2024, down from an SR36.42 million net profit in 2023. This decline is primarily attributed to a decrease in operating profit resulting from operational losses incurred by some affiliated companies, particularly West Jeddah Hospital, due to the opening and commencement of operations at Dr. Sulaiman Al-Habib Medical Hospital in Jeddah at the end of the first quarter of 2024, along with recorded losses in Al-Jawhara Al-Kubra Co. The net loss is also linked to an increase in general and administrative expenses along with a 31 percent surge in financing costs compared to the previous year. Alandalus Property Co. ended the session at SR23.00, down 1.13 percent.
Arab News
21-03-2025
- Business
- Arab News
Saudi banks shift focus to debt markets during sukuk surge
RIYADH: As Saudi Arabia's financial system turns increasingly to debt markets for funding, it will face new opportunities and increased risk in relation to its stability and resilience, experts told Arab News. The growth of sukuk issuance and other debt market activities are essential to the Kingdom's economic diversification targets and objectives set out in the Vision 2030 initiative. Saudi Arabia raised SR2.64 billion ($704 million) through sukuk issuances in March, following the SR3.07 billion secured in February and SR3.72 billion in January. A report by Fitch Ratings in February showed that the Kingdom holds the largest share of the Gulf Cooperation Council's debt capital market — which itself surpassed the $1 trillion milestone at the end of January. This represented a 10 percent year-on-year growth across all currencies. Another report by Fitch earlier this year showed that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets — outside China — and the world's largest sukuk issuer in 2024. The Kingdom's debt capital market grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt. Funding uses Saudi Arabia uses sukuk issuance as a mechanism to finance giga-projects such as NEOM, the Red Sea, and Qiddiya, which collectively require hundreds of billions of dollars in funding. Ian Khan, a technology futurist and author, said this highlights the Kingdom's commitment to Islamic finance as a driver of sustainable development. 'Sukuk aligns with Vision 2030 by attracting both domestic and international ethical investors, particularly from markets in Southeast Asia, the Middle East, and North Africa. Additionally, sukuk's structure, which ties returns to tangible assets, ensures that funds are channeled into real economic activities such as renewable energy, infrastructure, and technology, all of which are cornerstones of Saudi Arabia's diversification agenda,' Khan said. 'Furthermore, by developing its domestic sukuk market, the Kingdom reduces its dependence on oil revenues, which currently account for over 50 percent of GDP,' he said. Khan emphasized that sukuk also supports green finance initiatives, with Saudi entities already issuing green sukuk to fund renewable projects such as the 300 MW Sakaka Solar Project. Risks and rewards According to Mohammad Nikkar, principal at Arthur D. Little Middle East, reports published by the Kingdom's central bank highlight the capitalization strength of the Saudi banking system. 'However, an overreliance on external funding such as debt markets could potentially weaken the credit quality of the banking system, highlighting the need for more prudent risk management,' he said. There is no doubt that as the focus shifts toward debt markets, new dynamics and opportunities emerge. 'As the sector progresses toward 2030 and beyond, the increasing reliance on debt markets necessitates continued regulatory vigilance and the implementation of robust risk management practices to maintain overall stability and resilience,' Nikkar said. Khan said that the Kingdom's sovereign bond issuances have been met with strong global demand, with oversubscriptions often exceeding several billion dollars, reflecting investor confidence in the country's economic reforms. 'However, the increasing exposure to external debt introduces risks, particularly if global interest rates rise or oil revenues fluctuate significantly,' he said. The author went on to emphasize that to address these challenges, the Saudi Central Bank is likely to strengthen regulatory frameworks and risk buffers, ensuring that banks maintain adequate capital and manage foreign currency risks effectively. According to Edmond Christou and Basel Al-Waqayan, analysts at Bloomberg Intelligence, the increasing reliance on debt markets will improve the resilience of Saudi Arabia's banking sector by diversifying funding sources and providing more stable capital to support long-term project financing. 'With banks managing significant duration and liquidity risks, stable funding is critical for driving growth in key sectors aligned with Vision 2030. Senior unsecured paper, for instance, are issued at an average spread of 90 basis points above benchmark treasuries, while subordinated AT1 bonds range between 150–200 basis points,' the analysts told Arab News in a joint statement. 'In 2024, Saudi banks raised approximately $11.5 billion in debt markets, and they are on track to exceed that figure as they continue to finance major projects,' they added. Martin Blechta, partner at Boston Consulting Group, explained that some of the largest and most recent issuances were done by AlRajhi Bank, Riyad Bank, and Banque Saudi Fransi, as well as Arab National Bank, Saudi Investment Bank, and Gulf International Bank, among others. For some, this was a first-time issuance. 'The increasing reliance on the debt market is an expected progression of the banking sector overall and very much on the strategic agenda of the Saudi Capital Market Authority aiming to expand the debt instrument market,' Blechta said. 'Additional Tier 1 capital plays an important role in the capital structure of leading international banks and the recent developments in the Saudi banking sector are very much in line with that.' Vision 2030 alignment From ADL's point of view, Nikkar explained that by fostering a robust debt capital market, the Kingdom enables growth of alternative sources of funding — a pillar of its National Investment Strategy and aligned with Pillar 1 of the Financial Services Development Program. The ADL partner added: 'This expansion not only opens the country to more investments from international investors but also provides new opportunities for domestic investors to participate in the investment drive fueled by the country's unprecedented infrastructure and flagship projects within Vision 2030.' Christou and Al-Waqayan from Bloomberg Intelligence argued that growing focus on sukuk issuance and debt market activities is pivotal to support Saudi Vision 2030's objectives of economic diversification and sustainable growth. 'A deeper and more developed local capital market attracts foreign investment flows, which are critical to supporting the Kingdom's expanding economy. Initiatives such as last year's Saudi ETF listing in Hong Kong and China, as well as the Lenovo deal are key to attract international capital,' the analysts said. Blechta from BCG noted that banks are diversifying funding sources to match the changing nature of government and large corporate financing needs. 'The majority of large-scale projects are in need of very long-term debt that is typically USD-denominated, to increase international investor demand. Banks are accordingly matching this demand on their funding side. Interestingly, most recent Saudi bank debt issuances were heavily oversubscribed, which shows strong investor confidence in the Saudi banking sector overall,' the partner said. 'However, most demand for the SAR denomination was still domestic, while the USD titles have seen more international investor uptake,' he added. Transformative effects on the Kingdom's financial landscape The accelerating trend of Saudi banks looking toward debt markets is set to transform the Kingdom's financial landscape, From ADL's perspective, Nikkar believes that this shift is likely to deepen the capital markets, enhance liquidity, and introduce a wider array of financial instruments to market participants, thereby attracting a more diverse group of investors. 'The Saudi debt capital market is poised to exceed SR2 trillion outstanding over the next few years, driven by government projects under Vision 2030, deficit funding, diversification efforts, and ongoing reforms,' he said. 'This substantial growth indicates a maturing financial market capable of supporting large-scale economic initiatives. Collectively these developments will foster a more dynamic and diversified financial services ecosystem in Saudi Arabia,' the ADL representative added. Additionally, the accelerated shift of Saudi banks toward debt markets will fundamentally transform the Kingdom's financial landscape by enabling greater sophistication, resilience, and competitiveness. From Khan's point of view, Saudi banks hold an average capital adequacy ratio that provides a strong foundation for leveraging debt markets without compromising financial stability. The shift coincides with the Kingdom's efforts to develop the domestic capital markets, as evidenced by initiatives such as the Saudi Stock Exchange reforms and the Financial Sector Development Program. Khan believes this trend is likely to have a transformative effect on the expansion of debt market instruments. 'Saudi banks are increasingly involved in issuing corporate bonds, sukuk, and hybrid instruments to diversify their funding sources. This diversification reduces reliance on short-term deposits, thereby enhancing long-term stability,' Khan said. The trend will also lead to greater integration with global markets, technology and innovation in finance, and enhanced environmental, social and governance alignment. On integration with global markets, Khan said: 'Participation in international debt markets has already attracted significant foreign investments. For instance, Saudi Arabia's $10 billion green bond issued in 2023 was oversubscribed threefold, reflecting investor confidence. This global integration will help Saudi banks build stronger partnerships and access lower-cost capital.' With regards to technology and innovation in finance, he believes the way debt instruments are issued and traded will be transformed, saying: 'The Kingdom is embracing fintech to streamline debt market activities. For example, digital sukuk issuance platforms and blockchain-based systems are being explored to enhance transparency and efficiency.' Khan added: 'The rise of ESG-focused investments, particularly green bonds and sukuk, will push Saudi banks to prioritize sustainable finance. This aligns with Vision 2030 goals of achieving net-zero emissions by 2060 and attracting investors who prioritize sustainability.' Bhavya Kumar, managing director and partner at BCG, believes that an increasing reliance on debt markets presents opportunities and risks for the Kingdom's banking sector. 'While it supports Saudi's broader economic goals under Vision 2030 by diversifying funding sources — reducing dependency on deposits, improving risk management practices required to meet international investor expectations, and fostering financial market development — it also introduces vulnerabilities related to market volatility, leverage, and systemic risks,' Kumar said.
Arab News
19-03-2025
- Business
- Arab News
Saudi Arabia raises $704m through sukuk issuances in March
RIYADH: Saudi Arabia has raised SR2.64 billion ($704 million) through sukuk issuances in March as the Kingdom continues to explore opportunities in debt markets to accelerate economic diversification efforts. The latest riyal-denominated offering follows an SR3.07 billion issuance in February and SR3.72 billion in January. Saudi Arabia also raised SR11.59 billion in December and SR3.41 billion in November. The Kingdom has been playing a pivotal role in the global sukuk market, leveraging debt sales to finance projects under its Vision 2030 economic transformation plan. According to a statement by Saudi Arabia's National Debt Management Center, the issuance for March was divided into four tranches, with the first one valued at SR364 million and set to mature in 2027. The second tranche has a value of SR316 million, due in 2029, while the third, at SR1.46 billion, is set to mature in 2032. The fourth tranche worth SR500 million will expire in 2039. Sukuk, a Shariah-compliant financing instrument, allows investors to hold partial ownership of an issuer's assets while adhering to Islamic finance principles. Saudi Arabia's debt market has seen significant growth in recent years, attracting investors' interest in debt instruments amid rising interest rates. In March, a report released by Kuwait Financial Center, also known as Markaz, said that Saudi-based primary issuances of bonds and sukuk led the Gulf Cooperation Council region in 2024, raising $79.5 billion through 79 issuances. Markaz added that the Kingdom contributed to 53.7 percent of the overall primary debt issuances in the GCC region in 2024. In February, Saudi Arabia also raised €2.25 billion ($2.36 billion) through a euro-denominated bond sale, including its first green tranche, as part of its Global Medium-Term Note Issuance Program. Affirming the growth of the market of such Islamic bonds, S&P Global, in January, said that global sukuk issuance is projected to hit between $190 billion and $200 billion in 2025, driven by increased activity in key markets, including Saudi Arabia and Indonesia. In December, another report released by Kamco Invest projected that the Kingdom is expected to witness the greatest share of bond and sukuk maturities in the GCC, reaching $168 billion from 2025 to 2029. According to Kamco Invest, Saudi Arabia's maturities will be led by government issuances that are projected to hit $110.2 billion during the period.
Arab News
10-02-2025
- Business
- Arab News
MODON, Digital Saudi, and NHC drive $14.9bn in tech deals on LEAP's first day
JEDDAH: Saudi Arabia saw $14.9 billion in tech investments on LEAP's opening day, with major deals led by Saudi Authority for Industrial Cities and Technology Zones, Digital Saudi, and NHC reinforcing its Vision 2030 drive for global tech leadership. Being held from Feb. 9-12 in Riyadh, LEAP 2025 is a flagship event in the Kingdom as it aims to become a global and regional tech hub, aligned with Vision 2030 goals. This comes on the back of the Kingdom's growing push for investment in research, development, and innovation, with a World Economic Forum report projecting it will add $16 billion to Saudi Arabia's gross domestic product by 2030. Here is a wrap-up of some of the major deals signed on day one: MODON secures over $1.6bn in digital economy deals Saudi Authority for Industrial Cities and Technology Zones, also known as MODON, inked agreements worth more than SR6 billion ($1.6 billion) to boost the Kingdom's digital economy and enhance technical capabilities. Among the key deals was a contract with Link Development Co. to upgrade the Shareek system, aimed at improving the investor experience in industrial, logistics, and investment sectors. The authority also signed a SR2.64 billion deal with Saudi data infrastructure firm Ezditek to establish a 64-megawatt cloud data center in Riyadh's technical zone. DataVolt, a subsidiary of Vision Invest, secured a similar SR2.5 billion investment agreement for a data center in the same zone. Further agreements included a SR1.3 billion investment by Gulf Data Hub to build data centers in Dammam Second Industrial City and Jeddah Oasis, covering 163,000 sq. meters. MODON also partnered with the Ministry of Communications and Information Technology to accelerate cloud infrastructure development. The agreement ceremony was witnessed by Ibrahim Alkhorayef, minister of industry and chairman of MODON. Additionally, MODON signed a memorandum of understanding with Taibah Valley, an affiliate of Taibah University, to promote the adoption of emerging technologies in the industrial and technical sectors and support research, development, and innovation. KAFD, Huawei partner on smart city innovation The King Abdullah Financial District Development and Management Co. signed an MoU with Huawei to implement smart city solutions, AI-driven technologies, and 5G-A networks. The partnership aims to optimize operations and enhance the digital experience across KAFD's 1.6 million sq. meters of development. Ramez Al-Fayez, chief information technology officer at KAFD DMC, said the collaboration would help build a 'fully integrated urban environment that supports digital transformation.' Beyond infrastructure enhancements, the agreement also focuses on technology talent development, offering specialized training programs and globally recognized Huawei certifications such as HCNA, HCNP, and HCIE. KAFD and Huawei will additionally collaborate on digital research and analysis to explore emerging technological opportunities, support Saudi Arabia's digital transformation goals, and strengthen Huawei's regional presence. GACA taps SiFi for automated expense management The General Authority of Civil Aviation partnered with Saudi fintech firm SiFi to automate expense tracking and financial management processes, streamlining operations across the sector. Saudi Geospatial Authority, NHC Innovation collaborate The General Authority for Survey and Geospatial Information has signed an MoU with NHC Innovation to integrate geospatial data into real estate development, smart mobility, and navigation technologies. The partnership will leverage the Saudi Arabia National Spatial Reference System, or SANSRS, to enhance surveying and data-driven decision-making. Key initiatives include integrating the country's digital maps with the national geospatial platform, utilizing SANSRS for precise surveying, and advancing geospatial intelligence to support data-driven strategies. Saudi HR minister unveils digital services initiative Saudi Minister of Human Resources and Social Development Ahmed Al-Rajhi launched a suite of digital services aimed at improving accessibility and efficiency. The initiatives include a Virtual Branch for online government services, a Digital Childcare Platform for verified childcare center information, and a Social Development Platform to enhance community engagement and transparency. The new services align with the ministry's digital transformation strategy under Vision 2030, enhancing secure and innovative access to government services while fostering technological advancement in the Kingdom. These initiatives are part of the ministry's broader digital transformation efforts, which have automated more than 1,000 services and processes, benefiting over 32 million users, according to the ministry. Digital Saudi showcases Kingdom's tech advancements Digital Saudi, the Kingdom's premier international platform for highlighting digital achievements, kicked off alongside LEAP 2025. Serving as a unified stage for Saudi Arabia's digital transformation journey, Digital Saudi allows government entities to showcase their progress in e-government services, share success stories, and align with global best practices. It also educates the public on how to benefit from digital services. The platform further promotes the adoption of cutting-edge technologies, reinforcing Saudi Arabia's position as a leading digital innovation hub in line with Vision 2030.
