Saudi national debt office completes $33.3bn borrowing plan for 2021

Saudi Arabia's National Debt Management Center said it completed its 2021 borrowing plan exceeding SR125bn ($33.3 billion), according to a statement.

The Kingdom’s Finance Minister and chairman of the NDMC, Mohammed bin Abdullah Al-Jadaan, announced that 60.5 percent of the debt raised in 2021 was from local sources. The remaining 39.5 percent was made up of international borrwoing.

This was in line with the approved borrowing plan of the year. Additionally, a number of financing channels were utilized such as government alternative funding and early repurchase of local government issuances, a statement on the debt authority’s website said.

Work has also started on structuring the green financing framework which is one of the ministry’s new initiatives and debt-raising channels that are set to launch next year.

The NDMC was also successful in the issuance of sovereign bonds worth €6.8 billion ($7.7 billion), which was the highest ever negative yield issuance and had a coverage ratio of 3.3 times.

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.

Moreover, the authority said that it successfully arranged for a $3 billion funding provided by Korea Trade Insurance Corporation early this year and also arranged the second early repurchase of part of bonds and sukuk maturing next year with an amount that was over SR33 billion.

The minister also mentioned the improvements made in Saudi Arabia’s credit ratings, highlighting the efficiency of the fiscal system.

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.”