Saudi Arabia concluded its riyal-denominated sukuk issuance above the $2 billion mark for the third consecutive month in February, official data showed.
According to the National Debt Management Center, the Kingdom closed its issuance for February at SR7.87 billion ($2.10 billion).
In January, the Kingdom’s sukuk issuance amounted to SR8.82 billion, while in December 2023, it was SR10.53 billion.
On the other hand, Saudi Arabia’s sukuk issuance in October and November stood at SR2.66 billion and SR3.98 billion respectively.
The February offerings were divided into three tranches, according to an official statement.
The first tranche, valued at SR1.18 billion is set to mature in 2029, while the second allotment worth SR2.70 billion is due in 2034.
On the other hand, the third tranche, valued at SR3.97 billion is set to mature in 2039.
Sukuk, which is also called an Islamic bond, is a Shariah-compliant debt product.
In January, a report released by S&P Global suggested that sukuk issuance globally is expected to total between $160 billion-$170 billion in 2024, primarily driven by higher needs in some core Islamic finance countries.
The credit rating agency also added that the steady momentum of sukuk issuance is also supported by easing global liquidity conditions.
In 2023, global sukuk issuance declined by 6.1 percent to $168.4 billion compared to the previous year, due to tighter conditions in Saudi Arabia’s banking system and Indonesia’s lower fiscal deficit.
S&P Global further suggested that sustainable sukuk issuance will also rise in 2024, on the back of the successful UN Climate Change Conference, also known as COP28, which concluded in the UAE last year.
Earlier this month, Fitch Ratings said that the environmental, social, and governance sukuk market is expected to cross 7.5 percent of global outstanding Islamic bonds in the coming years.
Fitch added that the future growth of the ESG sukuk market will be driven by issuers’ diversification plans and governments’ sustainable initiatives.
“Fitch Ratings expects the ESG sukuk market to cross 7.5 percent of global outstanding sukuk in the coming years with growth likely to be supported by issuers’ funding diversification plans, to satisfy international ESG investors’ mandates, and by government sustainability initiatives,” said Fitch.
ESG sukuk, also known as green sukuk, is a Shariah-compliant financial instrument in which issuers exclusively use the proceeds of the issuance to finance investments in renewable energy or other environmental assets.