RIYADH: Saudi Arabia’s National Debt Management Center (NDMC) successfully raised SR7.83 billion ($2.09 billion) through its riyal-denominated sukuk issuance in October, marking a significant 201 percent increase compared to the previous month.

In September, the issuance amounted to SR2.60 billion. This surge continues the Kingdom’s robust activity in the sukuk market, following issuances of SR6.01 billion in August, SR3.21 billion in July, and SR4.4 billion in June.

Sukuk, or Islamic bonds, are Shariah-compliant financial instruments that provide investors with partial ownership in an issuer’s assets. The recent increase in Saudi Arabia’s sukuk issuance aligns with a broader trend observed by Moody’s, which noted in September that global sukuk markets are poised for a strong 2024, with issuance volumes expected to surpass 2023 levels despite a slowdown in the second half of the year.

S&P Global also forecasts that global Shariah-compliant bond issuance could reach between $200 billion and $210 billion this year, up from just under $200 billion in 2023. According to an NDMC statement, the October issuance was divided into five tranches, with the first tranche valued at SR823 million, maturing in 2029. The second tranche totaled SR320 million, set to mature in 2031, while the third was SR2.18 billion, maturing in 2034.

The fourth tranche, worth SR1.43 billion, matures in 2036, and the fifth, valued at SR3.07 billion, is set to mature in 2039. Earlier this month, Fitch Ratings noted that global sukuk issuances are rising due to improved financing conditions following the US Federal Reserve’s rate cuts to 5 percent in September.

The US-based agency anticipates interest rates to be 4.5 percent and 3.5 percent by the end of 2024 and 2025, respectively, which is expected to boost sukuk issuances in the short term. Fitch also reported that outstanding global sukuk reached $900 billion by the end of the third quarter of 2024, representing an 8.5 percent year-on-year increase.

In a separate August report, Fitch highlighted the UK’s position as a key center for Islamic finance, with the London Stock Exchange ranking as the third-largest listing venue for US dollar-denominated sukuk globally.

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