Economy News – Update
The Saudi National Religion Management Center reported an important milestone on Wednesday, announcing that the Kingdom successfully raised approximately $2.36 billion (or €2.25 billion) from the issuance of green bonds in euros for a seven-year term, alongside traditional bonds for a twelve-year duration.
This issuance marks the inaugural bond offering from the Kingdom’s government that incorporates a green component.
According to the center, the structure of the release comprised €1.5 billion in green bonds and €750 million in traditional bonds, garnering subscription requests totaling around €10 billion. This strong demand reflects robust investor interest.
The introduction of green bonds aligns with the Kingdom’s financial sector development program, aimed at promoting sustainability and achieving zero neutrality. This initiative underscores Saudi Arabia’s commitment to advancing its Vision 2030 objectives and conveying its efforts in sustainable finance to potential investors.
The pricing for the seven-year bonds was established at 115 basis points above the average yields of comparable fixed and floating-rate securities, while the twelve-year bonds were priced at 145 basis points over the same benchmark. The reduction in pricing from initial guidance was supported by strong demand for the issuance.
The launch of these green bonds represents the Kingdom’s first foray into this financing avenue, occurring at a time when the largest oil exporter in the world is actively pursuing economic diversification and reducing its dependency on oil revenues.
The issuance of these green bonds symbolizes a significant step forward in promoting sustainable finance as part of the Kingdom’s broader financial sector initiatives, facilitating investments in clean energy, environmental protection, and economic diversification.
In a previous issuance, Saudi Arabia successfully raised $12 billion from global debt markets through the sale of bonds across three different segments, demonstrating strong investor interest and providing vital funding to manage the national budget deficit and repay debts.
HSBC, JP Morgan, and Société Générale served as the global coordinators and active joint bookrunners for this bond issuance, while Crédit Agricole CIB and SNB Capital acted as co-managers.
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