Saudi Arabia raises US$1.9bil from sukuk to bolster finances

DUBAI: Saudi Arabia raised 7 billion riyals (US$1.9bil) from domestic sukuk sales as the kingdom seeks to bolster finances amid an economic overhaul and lower oil prices.

The Government received more than 24 billion riyals in bids for its third riyal-denominated Islamic bond sale, according to a statement on the Ministry of Finance’s website. It raised 2.4 billion riyals from a five-year tranche, 3.9 billion riyals from seven-year notes and 700 million riyals through a 10-year tranche.

The kingdom has raised 37 billion riyals in the past three months from domestic debt sales after tapping the international Islamic bond markets for US$9bil.

The fund-raising could help the government narrow an expected budget deficit of 198 billion riyals this year, or 7.7% of economic output.

Saudi Arabia is implementing a transformation plan aimed at weaning the economy off oil. As part of these efforts, the government plans to create the world’s largest sovereign fund and sell hundreds of state assets, including Saudi Arabian Oil Co as well as stakes in the stock exchange, football clubs and flour mills.

The Public Investment Fund, the kingdom’s wealth fund, will next month host chief executive officers of companies such as BlackRock Inc, HSBC Holdings Plc and SoftBank Group Corp at an event to showcase its “redefined investment mandate and strategy.”