Gulf Issuers Plan Bond Offerings Amid Market Volatility

Despite recent market disturbances triggered by tariff policies, Gulf-based issuers, including Saudi Arabia’s $925 billion sovereign wealth fund, are preparing new bond offerings, according to inside sources.

Since the announcement of extensive tariffs on April 2, markets have experienced volatility. This instability persists despite the partial rollback of these tariffs, as investors attempt to assess the future direction of these policies.

The Public Investment Fund (PIF) of Saudi Arabia intends to secure between $1.5 billion and $2 billion through a sukuk, or Islamic bond, within the next few weeks, according to two sources familiar with the situation. PIF has already accumulated $11 billion in funding this year.

This initiative occurs as Saudi Arabia faces escalating demands to either increase its debt or decrease spending, particularly following a sharp decline in crude prices that could eliminate tens of billions of dollars in revenue.

Zeina Rizk, co-head of fixed income at Amwal Capital Partners, commented that while oil prices are a major concern in the Middle East, corporations and governments possess robust fundamentals and increasing reserves.

Additional Planned Offerings

Abu Dhabi Ports Company is reportedly seeking to raise $2 billion in the near term, according to the same sources.

Separately, the renewable energy company Masdar is planning to secure $1 billion through a green bond issuance, as verified by a third source. However, these plans are not yet finalized.

PIF has declined to provide comments regarding these plans. AD Ports and Masdar were not immediately available to offer their remarks.

State-affiliated enterprises in both Saudi Arabia and the UAE have been actively raising capital in recent years to support international acquisitions, aligning with governmental strategies to foster national industry leaders and diversify their respective economies.

However, the recent instability in the bond market implies that these issuers may encounter higher costs for borrowing.

Rizk indicated that she remains optimistic, assuming market conditions remain relatively stable, similar to the previous week. She noted the successful launch of a $500 million sukuk by Dubai’s Mashreq as a positive sign of market appetite.

Banque Saudi Fransi (BSF) is also aiming to raise capital through a bond issuance that exceeds benchmark rates this week, the sources added. In March, Saudi National Bank successfully raised $750 million through a dollar-denominated bond issued in Taiwan.

BSF was not available for immediate comment.

Saudi Arabian banks have been crucial in funding large-scale projects like NEOM, Qiddiya, and the Red Sea initiatives, which collectively require hundreds of billions of dollars in investment.

Fitch forecasts a credit growth of 12% to 14% for the Saudi banking sector in 2025, with lending growth surpassing deposit growth, further increasing the deposit gap, which was projected at 0.3 trillion riyals ($79.96 billion) in 2024.