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Debt issuances in Saudi Arabia have outpaced equity by three times as entities including the Public Investment Fund, along with Aramco and utilities giant, the Saudi Electricity Company (SEC) turn to capital markets.
“Public debt issuances have remained the go-to option for corporates in Saudi Arabia between 2020 and the first half of this year with the kingdom raising over 370 billion riyals ($99 billion) in debt between 2020 and H1 2025. In comparison, equity only accounted for SAR 104 billion over the same period,” said Paul Feghaly, Analyst, Moody’s Ratings.
Debt issuances in Saudi have crossed $15 billion in the first half of 2025.
The near $1 trillion PIF has invested more than SAR 642 billion in the past five years to strengthen existing non-oil sectors such as retail, consumer goods, telecommunications and financial services. It has also provided funding for new industries including aerospace and manufacturing, metals and mining, automotive and technology with notable investments including ALAT, Riyadh Air, and Tahakom Investment Company.
Moody’s estimates investments from PIF alone will reach SAR 1 trillion during the 2025-30 period, supported by a diversified funding model that combines internally generated cash flow, capital recycling, loans and debt issuances, government injections of capital and asset transfers.
On Tuesday, PIF tapped international debt markets once again, its second issuance in less than a month, with an inaugural EUR green dual-tranche benchmark bond that raised a collective €1.65 billion.
The kingdom’s oil and gas giant Aramco has made energy the leading sector in debt issuance volumes since 2020. Last month, Aramco raised $3 billion through a five- and 10-year sukuk issuance.
The debt sale in September was preceded by a $5 billion raise in May through a three-tranche dollar-denominated bond issuance.
Beyond energy and the sovereign wealth fund, utilities round up the top three that have led debt issuances in the kingdom in H1 2025, according to Moody’s, with SEC raising $2.75 billion through a dual tranche sukuk offering in February.
“Since 2021, we have seen strong growth momentum in sectors such as real estate, services, manufacturing, and transportation, with this diversification unlocking significant growth potential for corporates,” Aziz Al Sammarai, AVP – Analyst, Moody’s Ratings said.
“Companies are investing mainly in capacity expansion, infrastructure setup and technology enhancements to capture emerging opportunities. Naturally, this wave of investment has led into an increase of total debt,” he added.
Sovereign debt rises to fund Vision 2030
Saudi’s moderate fiscal deficits are likely to continue with its debt projected to rise by a further 10% by 2030 from 26% recorded in 2024.
The kingdom’s debt could reach 36% of GDP by the end of the decade as lower oil prices increase a trade-off between diversification spending and maintaining robust government finances, Moody’s said.
“This year, we are looking at deficits of around 5%, with the next couple of years indicating an expected fiscal deficit of about 3% to 4%, which will result in the government debt burden converging towards and eventually rising above peers,” Christian Fang, VP, Senior Analyst, Moody’s Ratings, said.
(Reporting by Bindu Rai, editing by Seban Scaria)
