Other BriefingsSaudi Arabia New Sukuk Issuance and Buyback Worth US$32 Billion
Saudi Arabia issues US$16 billion in sukuk across five tranches, reflecting the growing depth of its Shariah-compliant bond market.
In May 2025, Saudi Arabia’s National Debt Management Center (NDMC) announced the issuance of new sukuk worth approximately SAR 60.3 billion (US$16 billion). The sukuk issuance coincided with an early buyback of government debt maturing between 2025 and 2029 worth SAR 60.4 billion (US$16 billion), as part of the Kingdom’s broader strategy to enhance fiscal sustainability, optimize public debt servicing, and deepen the domestic debt market. This initiative aligns with Saudi Arabia’s Vision 2030 and the Financial Sector Development Program, which aims to diversify the economy and expand financial sector assets and instruments.
Sukuk issuance breakdown and structure
The new issuance was divided into five tranches with staggered maturities:
|
Sukuk Issuance Breakdown |
||
| Tranche | Amount (US$) | Maturity Year |
| 1 | 5.73 billion | 2032 |
| 2 | 480 million | 2035 |
| 3 | 3.79 billion | 2036 |
| 4 | 1.57 billion | 2039 |
| 5 | 4.51 billion | 2040 |
The debt buyback and concurrent sukuk issuance were structured to smoothen the maturity profile of Saudi government bonds and reduce rollover risk. The Ministry of Finance appointed HSBC Saudi Arabia, AlAhli Capital, Al Rajhi Capital, AlJazira Capital, and Alinma Investment as joint lead managers for the transaction.
According to the NDMC, this transaction was the sixth early repurchase operation in the domestic market and a continuation of efforts to exercise active debt portfolio management while fostering sukuk market development.
Fiscal and market implications
The Kingdom’s average cost of debt stands at 3.6 percent, among the lowest in emerging markets. This low risk profile is underpinned by a diversified funding strategy, adherence to international financial stability standards, and deepening local capital market infrastructure.
This sukuk issuance contributes to Saudi Arabia’s goal of increasing the share of debt instruments in GDP to 24.1 percent by 2025, up from 15.6 percent in 2019. The Financial Sector Development Program also aims to raise stock market capitalization to 80.8 percent of GDP and increase banking assets to SAR 3.5 trillion (US$930 billion) by 2025.
The issuance also reflects ongoing investor appetite for Saudi sukuk, supported by market liquidity, macroeconomic stability, and continued confidence in the Kingdom’s fiscal management.
Saudi Arabia’s leadership in the global sukuk market
Saudi Arabia remains one of the leading issuers in the global sukuk market. According to S&P Global Ratings, Saudi entities were major contributors to the surge in foreign currency sukuk, which rose 29 percent year-on-year in 2024 to reach US$72.7 billion. Total global sukuk issuance for 2024 stood at US$193.4 billion, with the Kingdom playing a central role alongside Malaysia and Indonesia.
Sukuk are Shariah-compliant financial certificates similar to conventional bonds, but structured around asset ownership rather than interest payments. This makes them a key financing instrument for sovereigns and corporates in Islamic finance jurisdictions.
Saudi Arabia’s sukuk issuance strategy is not limited to domestic fundraising. It also includes green and sustainability-linked sukuk, aligning financial instruments with environmental and social objectives. The Kingdom’s active engagement in this space reflects its long-term commitment to economic diversification and responsible investment.
Vision 2030 and market development
The latest sukuk issuance supports Vision 2030’s mandate to create a deeper, more diversified financial system. The Kingdom’s sovereign debt strategy involves tapping both local and global sukuk markets to finance development goals without compromising fiscal discipline.
Sukuk, particularly when issued in longer maturities, help extend the government’s debt maturity profile and attract institutional investors seeking stable, Shariah-compliant returns. With regular issuances and policy-driven development, Saudi Arabia is creating a benchmark yield curve for sukuk, which is vital for price discovery and market liquidity.
Moreover, the presence of multiple tranches with staggered maturity dates in this issuance allows for better alignment with investor demand and cash flow forecasting, which in turn strengthens secondary market activity.
In brief
Saudi Arabia’s US$16 billion sukuk issuance in May 2025 reflects a broader shift toward proactive debt management and greater engagement with Shariah-compliant financing instruments.
While the dual transaction, debt buyback and long-term sukuk issuance, aims to smoothen the Kingdom’s maturity profile and reduce refinancing pressure, it also raises questions about the pace and structure of sovereign borrowing amid changing oil revenue dynamics. As Saudi Arabia deepens its domestic capital market, the challenge will lie in balancing fiscal expansion with long-term debt sustainability
(US$1 = SAR 3.75)
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