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Cargo Ship Runs Aground in Suez Canal, Traffic Not Impacted

This is a locator map for the Suez Canal and the Sinai Peninsula in Egypt, with its capital, Cairo. (AP Photo)
This is a locator map for the Suez Canal and the Sinai Peninsula in Egypt, with its capital, Cairo. (AP Photo)
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Cargo Ship Runs Aground in Suez Canal, Traffic Not Impacted

This is a locator map for the Suez Canal and the Sinai Peninsula in Egypt, with its capital, Cairo. (AP Photo)
This is a locator map for the Suez Canal and the Sinai Peninsula in Egypt, with its capital, Cairo. (AP Photo)

A cargo vessel ran aground in the Suez Canal on Sunday, but traffic through the global waterway was not impacted, Egyptian authorities said.

The Liberia-flagged MSC Istanbul, heading to Portugal from Malaysia, got stuck in a two-lane part of the Suez Canal, said Adm. Ossama Rabei, head of the Suez Canal Authority. He added that tugboats were deployed to help refloat the vessel.

Despite the situation, convoys were transiting through the waterway without any problems, Rabei said, without elaborating on what had caused the ship to run aground.

The Suez Canal allows for passage of two convoys of vessels a day in both directions. Later Sunday and after a five-hour effort, the MSC Istanbul was refloated.

Built in 2015 and operated by the Geneva-based Mediterranean Shipping Company, the MSC Istanbul is 399 meters (1,309 feet) long and 54 meters (177 feet) wide, according to Marine Traffic, a vessel tracking firm.

The vessel’s length is similar to that of the Ever Given, a colossal container ship that crashed into a bank on a single-lane stretch of the canal in March 2021, blocking the waterway. A massive salvage effort by a flotilla of tugboats helped by the tides freed the skyscraper-sized vessel six days later, ending the crisis, and allowing hundreds of waiting ships to pass through the canal.

After it was freed, the Ever Given was held for more than three months in Egypt amid a financial dispute with authorities. Its release came after its owner reached a settlement with canal authorities over compensation following weeks of negotiations and a court standoff. Officials did not reveal details on the terms of the settlement but canal authorities had sought more than $900 million in compensation.

The canal’s blockage forced some ships at the time to take the lengthy alternate route around the Cape of Good Hope at Africa’s southern tip, requiring additional fuel and other costs. Hundreds of other ships waited in place for the blockage to end.

Sunday’s incident was the latest case of a vessel reported stuck in the key global waterway. A tanker transporting liquefied natural gas broke down in the canal last month, also without impacting traffic. In January, a cargo ship carrying corn went aground before being refloated; after a while, traffic through the waterway was restored.

The canal, opened in 1869, provides a crucial link for oil, natural gas and cargo. About 10% of world trade flows through the canal, a major source of foreign currency for Egypt.

According to the Suez Canal Authority, last year, 23,851 vessels passed through the waterway, compared to 20,649 vessels in 2021. The revenue from the canal in 2022 reached $8 billion, the highest in the Suez Canal’s history.

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Saudi Arabia Raises $12 Billion in International Bonds Amid Strong Demand

Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
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Saudi Arabia Raises $12 Billion in International Bonds Amid Strong Demand

Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).
Skyscrapers are seen in King Abdullah Financial District in the Saudi capital, Riyadh. (Reuters).

Saudi Arabia has raised $12 billion from global debt markets in its first international bond issuance of the year, attracting bids worth nearly $37 billion. This demonstrates strong investor appetite for Saudi debt instruments.

The issuance comes just two days after the approval of the 2025 annual borrowing plan by Minister of Finance Mohammed Al-Jadaan. The plan estimates financing needs for the fiscal year at SAR 139 billion ($37 billion). The funds will be used to cover the projected SAR 101 billion ($26.8 billion) budget deficit for 2025, as well as repay SAR 38 billion ($10 billion) in principal debt obligations due this year.

The National Debt Management Center (NDMC) announced on Tuesday that the issuance includes three tranches: $5 billion in three-year bonds, $3 billion in six-year bonds, and $4 billion in ten-year bonds. Total demand for the bonds reached $37 billion, exceeding the issuance size by three times and reflecting robust investor interest.

The NDMC emphasized that this issuance aligns with its strategy to broaden the investor base and efficiently meet Saudi Arabia’s financing needs in global debt markets.

According to IFR, a fixed-income news service, the initial price guidance for the three-year bonds was set at 120 basis points above US Treasury yields. The six-year and ten-year bonds were priced at 130 and 140 basis points above the same benchmark, respectively.

Strong demand allowed Saudi Arabia to lower yields on the shorter-term bonds, further demonstrating investor confidence. Economists noted that the pricing above US Treasuries is attractive in the current market, showcasing trust in Saudi Arabia’s economic stability and financial strategies.

International confidence

Economic experts view this successful bond issuance as a testament to international confidence in Saudi Arabia’s robust economy and financial reforms. Dr. Mohammed Al-Qahtani, an economics professor at King Faisal University, said the move underscores Saudi Arabia’s commitment to diversifying financing tools both domestically and internationally. He added that the funds would support Vision 2030 projects, reduce pressure on domestic resources, and attract strong international investor interest.

The issuance strengthens Saudi Arabia’s ability to meet financial needs, expand its investor base, and establish a global financing network, he said, noting that it also facilitates entry into new markets, enabling the Kingdom to accelerate infrastructure projects and capital expenditures.

Dr. Ihsan Buhulaiga, founder of Joatha Business Development Consultants, described the 2025 budget as expansionary, aimed at meeting the financing needs of economic diversification programs. He stressed that the budget deficit is an “optional” one, reflecting a deliberate choice to prioritize Vision 2030 initiatives over immediate fiscal balance.

Buhulaiga explained that the Kingdom’s approach balances two options: limiting spending to available revenues, which would avoid deficits but delay Vision 2030 initiatives, or borrowing strategically to fund Vision 2030 goals. He said that the annual budget is just a component of the larger vision, which requires sustained funding until 2030.

He continued that Saudi Arabia’s fiscal space and creditworthiness allow it to borrow internationally at competitive rates, explaining that this flexibility ensures financial sustainability without compromising stability, even during challenges like the COVID-19 pandemic.

Saudi Arabia’s debt portfolio remains balanced, with two-thirds of its debt domestic and one-third external. As of Q3 2024, public debt stood at approximately SAR 1.2 trillion, below the 30% GDP ceiling. According to the Ministry of Finance, the budget deficit is expected to persist through 2027 but remain below 3% of GDP.

Buhulaiga highlighted the importance of capital expenditure, which reached SAR 186 billion in 2023 and is projected to rise to SAR 198 billion in 2024, a 6.5% increase.

He emphasized the government’s pivotal role in economic diversification, supported by investments from the Public Investment Fund (PIF), the National Development Fund, and its subsidiaries, including the Infrastructure Fund.

The PIF recently announced a $7 billion Murabaha credit facility, facilitated by Citigroup, Goldman Sachs International, and JPMorgan. Meanwhile, the NDMC arranged a $2.5 billion revolving credit facility earlier in January, compliant with Islamic principles, to address budgetary needs.

In November, Moody’s upgraded Saudi Arabia’s credit rating to Aa3, aligning with Fitch’s A+ rating, both with a stable outlook. S&P Global assigns the Kingdom an AA-1 rating with a positive outlook, reflecting a high ability to meet financial obligations with low credit risk.

The IMF estimates Saudi Arabia’s public debt-to-GDP ratio at 26.2% in 2024, describing it as low and sustainable. This is projected to rise to 35% by 2029 as foreign borrowing continues to play a key role in financing deficits.