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Saudi Sukuk draws $16.5B in demand
Saudi Arabia successfully issued its first USD-denominated sovereign sukuk in 2026, despite a wave of sell-offs impacting global bond markets. The demand for the issuance reached about $16.5 billion, more than five times the targeted amount of $3.25 billion. A total of $1.25 billion was raised through five-year sukuk, and $2 billion through ten-year sukuk, with the profit margin reduced by approximately 30 basis points from the initial levels. This issuance comes amid challenging economic conditions, where rising oil prices and regional instability have increased the government’s deficit, although Saudi Arabia has managed to reduce the deficit and generate significant oil revenues. This offering serves as a test of Saudi Arabia’s ability to borrow at favorable costs in a volatile global environment, aiming to fund budget needs with an expected reduction in the deficit to 3.7% of GDP in 2026.
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