Saudi Arabia taps into global debt markets with a mix of green and conventional bonds.
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| Saudi Arabia Raises $2.36 Billion in First-Ever Green Bond Sale |
Breaking Down the Bonds
The sale was split into two parts: €1.5 billion ($1.57 billion) in seven-year green bonds and €750 million ($787 million) in 12-year conventional bonds. Investors showed strong interest, with bids totaling around €10 billion ($10.5 billion).
According to IFR Fixed Income News, the seven-year bonds were priced at 115 basis points over midswaps, while the 12-year bonds came in at 145 basis points over the same benchmark. High demand allowed for pricing below initial guidance.
A Greener Path Forward
Issuing green bonds is a significant step for Saudi Arabia, the world's top oil exporter. The country is striving to diversify its economy and lessen its oil dependence. The National Debt Management Center highlighted that this green tranche is part of the Financial Sector Development Program, supporting the Kingdom's goals of sustainability and achieving net-zero emissions. It's a key move toward the objectives outlined in Saudi Vision 2030.
The Kingdom's green finance framework plans to channel funds from these bonds into projects promoting clean energy, economic diversification, and environmental protection.
Looking Ahead
Saudi Arabia anticipates a fiscal deficit of $27 billion by 2025, driven by strategic investments in Vision 2030 projects aimed at economic reform and diversification.
Just last month, the Kingdom raised $12 billion through a three-part bond sale in global markets, attracting strong investor interest. These funds are expected to help cover the budget shortfall and manage existing debt.
In essence, Saudi Arabia is taking concrete steps to reshape its financial landscape, balancing immediate fiscal needs with long-term sustainability and economic diversification goals.