Saudi Arabia raises $3.25bn in two-part sukuk as orders reach $16.5bn

Saudi Arabia raised $3.25 billion, or SAR12.19 billion, through a two-tranche international sukuk, with investor orders reaching about $16.5 billion — roughly five times the amount sold.

KSA Ijarah Sukuk Limited issued the trust certificates under the Global Trust Certificate Issuance Program. It is the Kingdom's second international transaction using an Ijarah structure. The shorter tranche, $1.25 billion (SAR4.69 billion), matures in 2031; the longer, $2 billion (SAR7.5 billion), matures in 2036. The National Debt Management Center said tranche amounts were rounded to the nearest decimal.

The debt office said the sale supports diversifying the investor base and meeting financing needs through international debt markets, and that the order book reflects confidence in the Saudi economy and future investment opportunities.

The first Ijarah issue, in September 2025, raised $5.5 billion through a $2.25 billion five-year tranche due 2030 and a $3.25 billion 10-year tranche due 2035. Its order book was about $19 billion, an oversubscription ratio of roughly 3.5 times. The new deal is smaller in absolute orders but drew stronger relative demand. Together the two issues give Saudi dollar sukuk a maturity curve spanning 2030, 2031, 2035 and 2036.

Timing matters here. In May the debt office said about 90 percent of 2026 funding requirements had been secured before regional geopolitical events intensified, and international public-market issuance was cut below the level set in the annual borrowing plan. Private financing channels and the domestic market took a larger share. The door was left open to further international sales when favourable opportunities arose. The 2026 plan put total funding requirements at about SAR217 billion, of which SAR165 billion covers the projected budget deficit and about SAR52 billion goes to principal repayments on maturing debt.

The year's other large external trade came in January 2026: an $11.5 billion four-tranche bond sale under the Global Medium-Term Note Issuance Program, comprising $2.5 billion due 2029, $2.75 billion due 2031, $2.75 billion due 2036 and $3.5 billion due 2056. That drew about $31 billion in orders, or 2.7 times the amount issued.

At home, August riyal sukuk issuance totalled SAR9.518 billion across five tranches maturing between 2031 and 2041. In July the debt office repurchased about SAR17.1 billion of government sukuk due in 2027, 2028 and 2030 and replaced them with about SAR17.2 billion of new paper maturing in 2031, 2033, 2036, 2039 and 2041. The largest replacement tranche was about SAR10.55 billion due 2036. The centre said the transaction was meant to strengthen the domestic debt market and ease refinancing pressure. Liability-management deals in 2025 reached SAR60 billion, retiring securities maturing from 2025 to 2029 and issuing longer-dated paper out to 2040.

Total government debt stood at SAR1.685 trillion at the end of the second quarter of 2026, about 33.9 percent of projected GDP for the year, against SAR1.519 trillion, or 33 percent of GDP, at end-2025. About 87 percent of the portfolio is fixed-rate, the split is roughly 62 percent domestic and 38 percent international, and average time to maturity is nine years. Sovereign ratings sit at Aa3 from Moody's and A+ from Fitch and S&P.

Passive demand is set to grow. J.P. Morgan said in April that Saudi riyal government sukuk would join its Government Bond Index-Emerging Markets from January 2027 at an expected weight of 2.52 percent, covering eight issues with about $69 billion in nominal value. Bloomberg said eligible Saudi sukuk would enter its Emerging Market Local Currency Government Index at the April 2027 rebalancing. The debt office linked both decisions to reforms including an expanded Primary Dealers Program, an over-the-counter settlement framework introduced in 2025 and connectivity with international central securities depositories such as Euroclear.

Other channels are filling out the funding mix. On August 24 the Ministry of Finance announced a joint statement with Bpifrance Assurance Export on a credit line of up to $5 billion, structured as a shopping line for contracts involving French companies in infrastructure, urban development, transport and healthcare tied to Vision 2030. A $1.5 billion agreement with Japan's export credit agency NEXI was arranged earlier in the year, and the Kingdom entered 2026 having completed a $13 billion syndicated loan for power, water and public-utility projects. The annual borrowing plan names infrastructure and project financing and export credit agencies as increasingly important sources, with international bond markets described as facing elevated yields and renewed volatility.

The two Ijarah sales leave Saudi Arabia with dollar sukuk maturing in 2030, 2031, 2035 and 2036 — a reference curve it did not previously have, priced against a domestic market now carrying a larger share of the borrowing plan.