Saudi Arabia has indicated plans to sustain its bond issuance pace in 2025 to finance extensive oil-diversification projects. The government commenced the sale of its first bond of the year on Monday, targeting a three-tranche dollar deal.
Details regarding the pricing and size of the three-, six-, and ten-year notes are expected to be finalized later today. Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co. are managing the transaction.
The National Debt Management Center estimates the kingdom's funding requirements for this year at 139 billion riyals ($37 billion), with over 100 billion riyals allocated to cover the budget deficit and the remainder for repaying maturing debt.
In addition to bonds, Saudi Arabia is likely to pursue loans, having recently secured a $2.5 billion revolving credit facility from Abu Dhabi Islamic Bank, Credit Agricole SA, and Dubai Islamic Bank.
In 2024, the kingdom issued $17 billion in international bonds, ranking second in emerging markets, with all bonds denominated in dollars. This year, it may consider diversifying its funding by exploring other currencies.
Overall bond funding last year, including state-controlled entities, reached approximately $50 billion. Under the Vision 2030 initiative led by Crown Prince Mohammed bin Salman, the government is investing heavily in various sectors, including new cities and technology.
Currently, Brent crude is priced around $76 per barrel, falling short of the $90 per barrel needed to balance the budget for 2025, according to the International Monetary Fund. Despite this, state producer Aramco has raised oil prices for Asian buyers, signaling anticipated demand growth.
The government projects a fiscal deficit of about 2.8% of GDP for this year.