Saudi Arabia to refinance $11.5bn of debt in 2022, NDMC says|Arab News Japan

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Arab News

RIYADH: Saudi Arabia’s funding requirement for 2022 will mainly focus on debt refinancing which amounts to approximately SR43 billion ($11.5 billion), the Kingdom’s National Debt Management Center said in a statement.

NDMC Board of Directors, chaired by the Minister of Finance, Mohammed Al-Jadaan, endorsed the 2022 annual borrowing plan during its last meeting according to the statement.

The plan highlighted that the NDMC will continue to proactively monitor the market taking into consideration interest rate movements and will be seizing opportunities that will enhance the characteristics of the Kingdom’s debt portfolio.

As per 2022 official budget statement, public debt is estimated to remain at approximately SR938 billion by 2022 year-end.

“Based on market conditions throughout 2022 and while maintaining the current debt strategy, the government might consider additional tactical funding activities through the available funding channels, either domestically or internationally including   debt capital markets and/or government alternative financing to fund opportunities that will promote economic growth such as capital expenditures and infrastructure financing,” the statement added.

​Last December, the NDMC announced the completion of the 2021 borrowing plan, with total financing of SR125 billion. 60.5 percent of the debt raised in 2021 was from local sources, while the remaining 39.5 percent was made up of international borrowing.

The borrowing plan last year included several funding channels, of which the issuance of €1.5 billion of Euro denominated bonds, the largest negative yield issuance ever to be executed out of EU with 3.3 times coverage ratio, according to NDMC. 

A negative yield is when an investor receives less money at the bond’s maturity than the original purchase price for the bond. In other words, instead of receiving a return from the issuer, the depositors are paying the lender a net amount at maturity.

Additionally, the NDMC executed an exchange transaction of Sukuk and bonds maturing in 2022, with total size exceeding SR33 billion.

Last July, Fitch Ratings decided to revise the Kingdom’s outlook to stable from negative and affirmed its rating at ‘A’, reflecting “prospects for a smaller deterioration in key sovereign balance-sheet metrics,” a report on their website said.

Moody’s, another ratings agency, also followed suit, raising the country’s outlook to stable from negative in November. It said on its website that “the government will reverse most of the 2020 increase in its debt burden while also preserving its fiscal buffers.”

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