Debt Management Office of the Year, MENA
Fahad Al-Saif, Saudi Arabia The Gulf state is extending its curve and sourcing new channels of funding to meet its fiscal objectives.
Despite enduring unprecedented levels of market and commodity volatility, Saudi Arabia’s debt management office has achieved great success this year in capital markets.
The kingdom has raised $12bn in international markets so far this year, in two separate deals: a $7bn triple trancher in April, which included its longest ever bond, of 40 years, and a $5bn triple trancher in January, which was priced inside the borrower’s curve. Both of those issues signified to investors Saudi Arabia’s fire power.
“The kingdom has extended its dollar curve twice in 2020, from 30 years to 35 years in its January issuance and to 40 years in April, marking the largest EM order book in 2020, which is a testament to KSA’s balance sheet strength,” says Hani Almedaini, head of portfolio management at Saudi Arabia’s National Debt Management Center.
Importantly, the strengthening and enhancing of domestic capital markets through successful local sukuk issues is testament to the NDMC’s access to diverse sources of funding.
“The NDMC has developed and introduced new funding channels to support the government’s fiscal objectives during the pandemic,” Almedaini says.
The NDMC has also instituted measures in the local Islamic market to grow the depth in secondary.
“This has been reflected by the increase in the secondary market turnover, which reached Sr55bn ($14.7bn) year to date,” Almedaini continues.
The NDMC managed to succeed in area of capital markets where no other Gulf sovereign has had success so far. In July, Saudi Arabia signed its inaugural green loan, backed by Germany’s export credit agency, Euler Hermes. The loan marked the first sovereign green loan in the Gulf region and has been recognised by the market as a huge triumph for the kingdom.