Saudi Debt Market Gathers Pace as Sovereign, Bank and Corporate Borrowing Converges

King Abdullah Financial District (KAFD) in Riyadh
King Abdullah Financial District (KAFD) in Riyadh
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Saudi Debt Market Gathers Pace as Sovereign, Bank and Corporate Borrowing Converges

King Abdullah Financial District (KAFD) in Riyadh
King Abdullah Financial District (KAFD) in Riyadh

Saudi Arabia’s debt market is seeing growing activity as the government, banks and companies tap international markets simultaneously, highlighting their widening use of debt instruments to diversify funding sources.

The kingdom is seeking to finance budget needs and investment projects, while Saudi banks and companies are moving to strengthen their capital bases and diversify funding channels.

The latest move came from the Saudi government, which raised $3.25 billion through a two-tranche offering of US dollar-denominated Islamic bonds, or sukuk.

Al Rajhi Bank has also begun offering Tier 2 sukuk for an amount yet to be determined. Arab National Bank, meanwhile, said it had completed a $750 million Additional Tier 1 sukuk offering with an annual yield of 6.5%.

In the corporate sector, Saudi Arabian Mining Co., known as Ma’aden, raised $1 billion through its first international term loan and revolving credit facility.

The simultaneous transactions illustrate the growing importance of the debt market as an alternative to traditional financing, with Saudi issuers benefiting from international demand for dollar-denominated debt despite persistently high global borrowing costs, said Abdullah Al-Mair, assistant professor of economics at King Fahd University of Petroleum and Minerals.

The International Monetary Fund expects Saudi public debt to reach 32.6% of gross domestic product this year, up from 29.8% in 2025, a level that remains low by global standards. The Finance Ministry forecasts the ratio at 33.9%, according to the kingdom’s 2026 budget statement.

The IMF had raised its growth forecasts for the Saudi economy for this year and next, citing its resilience in the face of global challenges, an expected improvement in oil revenue and accelerating growth in non-oil activities that have come to drive the country’s economic transformation.

Strong demand for Saudi debt

The latest sovereign issuance stands out as an indicator of investor appetite for Saudi debt instruments. Orders exceeded $16.5 billion, according to the National Debt Management Center, more than four times the $3.25 billion issue size.

The deal comprised a $1.25 billion five-year tranche and a $2 billion 10-year tranche. The final spreads were set at 70 basis points over US Treasury yields for the first tranche and 80 basis points for the second.

Al-Mair said the strength of demand reflected “a high level of confidence among international investors in the kingdom’s creditworthiness and its ability to meet its financial obligations.”

Orders exceeding four times the issue size “indicate that Saudi Arabia continues to enjoy strong access to global debt markets,” even amid high interest rates and geopolitical tensions, he said.

The kingdom’s ability to price the sukuk at relatively narrow spreads over US Treasury yields “reflects investors’ positive view of Saudi sovereign risk compared with many other emerging markets,” he added.

From government to banks and companies

Debt-market activity is not limited to government financing. Saudi banks are also turning to international markets to issue instruments that bolster their capital bases and provide additional sources of funding.

Arab National Bank said it had completed a $750 million Additional Tier 1 capital sukuk offering with an annual yield of 6.5%. The perpetual sukuk are callable after five years.

Al Rajhi Bank, meanwhile, has begun offering US dollar-denominated social Tier 2 sukuk with a maturity of 10-1/2 years and an option to redeem them after 5-1/4 years. The final size and pricing terms will be determined according to market conditions.

At the same time, Saudi companies are turning to international financing markets. Ma’aden raised $1 billion through its first international term loan and revolving credit facility in a move aimed at supporting its general needs and diversifying its funding sources.

The concurrent transactions indicate that the debt market is no longer merely a tool for financing the government deficit, but has become a broader channel for meeting the funding needs of financial institutions and companies, allowing them to reach a wider investor base and manage maturities and liquidity sources.

Borrowing rises, but debt costs pose a challenge

The moves come as part of Saudi Arabia’s 2026 borrowing plan, which aims to raise about $57.9 billion. Of that, about $44 billion will finance an expected budget deficit, while roughly $13.9 billion will be used to repay debt maturing during the year.

Al-Mair said continued borrowing would “naturally lead to an increase in public debt,” but noted that Saudi Arabia’s debt-to-GDP ratio did not exceed 33%, a level that, in his view, “remains manageable compared with many major economies.”

Continued government efforts to diversify revenue and manage maturities provide support for debt sustainability, he said, while debt-servicing costs represent the main challenge in the next phase.

“With global bond yields and interest rates remaining relatively high, new issuance and debt refinancing are becoming more expensive than in the years when interest rates were low,” Al-Mair said, warning that interest payments in the budget could rise in the coming years.

Can debt become a driver of growth?

Higher debt does not necessarily create fiscal pressure if it is used to finance investments capable of supporting growth and generating future revenue.

Al-Mair said the kingdom was directing part of its borrowing toward tourism, infrastructure and industrial projects, which could “increase non-oil revenue” and support the economy’s ability to absorb higher debt levels.

For Saudi Arabia, the issue therefore appears to be less about the volume of borrowing alone than about how it is managed, its cost and the economic return generated by its use. While the government continues to finance budget needs and projects through debt markets, banks and companies are using the same channel to strengthen their capital and diversify funding sources.

Al-Mair said demand for Saudi debt instruments at this time underscored their continued appeal to international investors, adding that “public debt is an important component in diversifying financing methods and has a clear impact on economic development.”

As the range of Saudi borrowers in international markets expands, continued demand for their debt instruments and issuers’ ability to maintain competitive funding costs will be key to determining how effectively the debt market can support the investment and spending phase associated with the kingdom’s economic transformation.



Georgieva: More Work Needed on Lebanon Program

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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Georgieva: More Work Needed on Lebanon Program

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

International Monetary Fund Managing Director Kristalina Georgieva said on Saturday that ‌there were "intense" ‌discussions on support ‌for Lebanon ⁠reflecting significant progress ⁠towards a loan program.

"In the case ‌of ‌Lebanon, we are ‌in very intense ‌discussions with the Lebanese authorities," Georgieva told a closing news conference at ‌IMF and World Bank annual meetings in ⁠Bangkok.

"We ⁠have made significant progress towards the program. We have still a bit more work to do together, and I'm confident we will be successful."


Al-Jadaan: Wars and Supply Disruptions Heighten Risks to Global Economy

Al-Jadaan during his participation in the meeting of Arab governors with the President of the World Bank Group on Friday (X)
Al-Jadaan during his participation in the meeting of Arab governors with the President of the World Bank Group on Friday (X)
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Al-Jadaan: Wars and Supply Disruptions Heighten Risks to Global Economy

Al-Jadaan during his participation in the meeting of Arab governors with the President of the World Bank Group on Friday (X)
Al-Jadaan during his participation in the meeting of Arab governors with the President of the World Bank Group on Friday (X)

Saudi Arabia's Finance Minister Mohammed Al-Jadaan, Chair of the International Monetary and Financial Committee (IMFC), said that ongoing wars, conflicts and supply chain disruptions were imposing significant human and economic costs worldwide and adding to price pressures, particularly in the poorest and most vulnerable countries.

In remarks at the Committee's 54th meeting in Bangkok, Jadaan stressed the need to strengthen economic and financial stability, step up international cooperation and end conflicts to achieve sustainable growth and long-term stability.

A statement issued following the Committee’s meeting said the global economy had weathered a series of recent shocks better than expected, but warned that the buffers underpinning its resilience had eroded, making its continued resilience uncertain.

The statement cautioned that escalating conflicts, trade tensions, rising public debt and higher refinancing costs could exacerbate economic and financial vulnerabilities, as economies undergo rapid structural transformations driven by technological advances, demographic shifts and climate risks.

The Committee stressed the need to address fiscal vulnerabilities, strengthen debt sustainability, and protect the most vulnerable groups and investments that support productivity and growth. It also underscored the importance of central bank independence, secure energy flows, freedom of navigation and enhanced international cooperation to address economic and financial challenges.

The Committee commended Saudi Arabia’s leadership and welcomed the extension of Al-Jadaan’s term as chair for one year.

It said the global economy had weathered recent shocks better than expected but warned that the buffers underpinning its resilience had eroded, making its continued resilience uncertain.

Wars and conflicts continue to impose immense humanitarian burdens and significant economic costs, while supply chain disruptions and trade tensions heighten uncertainty and price pressures.

Conversely, rapid advancements in advanced artificial intelligence technologies have contributed to supporting investment and trade, with the potential to boost productivity. The Committee explained that these developments have so far coincided with generally stable global growth, but economic gains remain uneven, while low-income countries and fragile states face the risk of widening the gap between them and other economies.

The Committee warned that risks are skewed to the downside, noting that escalating conflicts and trade tensions could disrupt vital trade routes and increase pressure on commodity prices, including refined energy products, in addition to exacerbating risks to energy and food supply security.

It also cautioned that rising sovereign bond yields in systematically important economies could affect global financial conditions, especially given high levels of public debt and refinancing needs in many countries. These pressures, along with the uncertainty surrounding the impact of advanced artificial intelligence technologies on the economy and financial sector, could further increase economic and financial vulnerabilities.

It added that accelerating technological transformations, demographic changes, increasing extreme weather events and natural disasters, as well as geoeconomic fragmentation, further complicate the choices and tradeoffs facing policymakers.

Fiscal Consolidation

The Committee emphasized that strengthening economic and financial stability requires sound and consistent macroeconomic policies and multilateral cooperation, supporting strong and broad-based growth.

It called for urgently addressing fiscal vulnerabilities and advancing efforts to consolidate spending and revenue, supported by credible medium-term fiscal frameworks, to ensure fiscal and debt sustainability and rebuild precautionary buffers, in line with each country's circumstances. At the same time, it stressed the need to protect the most vulnerable groups and priority investments that foster productivity and growth.

Regarding monetary policy, the Committee reaffirmed central banks' commitment to ensuring price stability in line with their mandates, while continuing to adjust policies based on data and clear communication regarding decisions. It emphasized that central bank independence is a fundamental pillar for policy credibility and maintaining stable inflation expectations.

It also underscored the importance of adhering to international standards and closely monitoring and addressing vulnerabilities and risks threatening financial stability. It welcomed the "Bangkok Blueprint," which aims to strengthen safeguards related to digital finance, enhance resilience against cyberattacks, and advance international efforts to combat digital fraud.

Concerning growth and productivity, the Committee called for continuing reforms that enhance the role of the private sector and leveraging advanced artificial intelligence technologies and digital transformation to boost productivity, while addressing the risks associated with these technologies and expanding the scope of their benefits.

It further stressed the necessity of international cooperation to address global challenges and ensure the stability and effective functioning of the international monetary system, tackle excessive global imbalances and trade tensions, avoid distortionary policies, and enhance supply chain resilience through reforms that consider each country's circumstances and multilateral cooperation, thereby supporting a fair and open global economy.

Regarding energy, the Committee emphasized the importance of ensuring safe and reliable energy flows and upholding the principle of freedom of navigation, considering them essential elements for global economic stability. It also reaffirmed adherence to the exchange rate commitments outlined in the April 2021 understanding.

Supporting Heavily Indebted Countries

The Committee also stressed the importance of assisting countries in implementing reforms and addressing debt-related vulnerabilities through sound macroeconomic policies, domestic resource mobilization, and improved governance.

It paid particular attention to the challenges facing low-income countries and the most vulnerable middle-income countries, including fragile and conflict-affected states and small developing states.

Regarding sovereign debt, the Committee stressed the need to continue improving restructuring operations, including within the "Common Framework," building on progress made, and advancing work at the "Global Sovereign Debt Roundtable" to ensure the orderly, coordinated, timely, and predictable implementation of restructuring operations.

It also called on all stakeholders, including private sector creditors, to enhance debt transparency.

The Committee encouraged increased support for countries with sustainable debt, strong reform programs, and robust growth plans, but which face short-term financing challenges, by accelerating the implementation of the IMF and World Bank Group's three-pillar approach.

It expressed gratitude to members who provided necessary assurances to support the self-sustaining lending capacity of the Growth and Poverty Reduction Trust Fund, looking forward to other members promptly providing the required guarantees.

IMF Reforms

The Committee welcomed the Managing Director of the International Monetary Fund's Global Policy Agenda and the recent approval of a comprehensive set of policy reviews aimed at strengthening economic surveillance, debt analysis, lending, and capacity development.

It called for the swift and effective implementation of these reforms, ensuring their fair and consistent application among members, and supported strengthening the integration between capacity development, economic surveillance, and lending.

It clarified that these changes would help countries identify risks, manage uncertainty, and implement sound policies and reliable frameworks, thereby enhancing resilience and supporting growth.

It also welcomed the Fund's work on the macroeconomic and policy-related implications of advanced artificial intelligence technologies, looking forward to further analysis and advice in this area within the institution's mandate.

Increasing Fund Resources

The Committee reiterated the importance of a strong, quota-based, and adequately resourced International Monetary Fund to ensure its continued pivotal role in the global financial safety net.

It called for the completion of necessary domestic approvals for the quota increase under the Sixteenth General Review of Quotas without further delay.

It also noted that the Diriyah Guidelines will provide a basis for future discussions on quota and governance reforms, including within the framework of the Seventeenth General Review of Quotas.

Modernizing Fund Operations and Enhancing Representation of Women and Regions

The Committee supported the International Monetary Fund's efforts to modernize its operations, strengthen institutional risk management, and invest in its staff, thereby maintaining its flexibility, responsiveness, and readiness for future requirements, including through the thoughtful internal use of advanced artificial intelligence technologies.

It expressed its appreciation for the work and efforts undertaken by Fund staff, within a merit-based system, and called for further improving the representation of regions and women in positions within the institution.

It also emphasized the importance of enhancing the representation of women on the Fund's Executive Board and in leadership positions within the Board, and affirmed the necessity of taking the required measures to achieve the voluntary goals adopted in this area.

It further stressed that the selection of all candidates should be based on the merit criteria adopted by each member country.

Finally, the Committee noted that its next meeting is expected to be held in Washington D.C. in April 2027.


Pakistan Says Attacks on Gulf Energy Infrastructure 'Worrying' for Outlook

Pakistan Finance Minister Muhammad Aurangzeb gestures during a Reuters interview in the IMF/World Bank 2026 Annual Meetings at the Queen Sirikit National Convention Center (QSNCC) in Bangkok, Thailand, October 12, 2026. REUTERS/Patipat Janthong
Pakistan Finance Minister Muhammad Aurangzeb gestures during a Reuters interview in the IMF/World Bank 2026 Annual Meetings at the Queen Sirikit National Convention Center (QSNCC) in Bangkok, Thailand, October 12, 2026. REUTERS/Patipat Janthong
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Pakistan Says Attacks on Gulf Energy Infrastructure 'Worrying' for Outlook

Pakistan Finance Minister Muhammad Aurangzeb gestures during a Reuters interview in the IMF/World Bank 2026 Annual Meetings at the Queen Sirikit National Convention Center (QSNCC) in Bangkok, Thailand, October 12, 2026. REUTERS/Patipat Janthong
Pakistan Finance Minister Muhammad Aurangzeb gestures during a Reuters interview in the IMF/World Bank 2026 Annual Meetings at the Queen Sirikit National Convention Center (QSNCC) in Bangkok, Thailand, October 12, 2026. REUTERS/Patipat Janthong

Pakistan's finance minister on Saturday told AFP the country had so far withstood the shock from skyrocketing energy prices due to the Iran war, but that attacks on infrastructure in Saudi Arabia and other Gulf countries were "worrying" for the country's longer-term economic outlook.

In an interview on the sidelines of the IMF-World Bank Annual Meetings in Bangkok, Muhammad Aurangzeb said the South Asian country had procured enough energy supplies to last through November, and was now planning for the winter months, when household needs typically spike.

"The first-order impact has been negotiated well by Pakistan," he said.

"We've had no shortage, no queues at the gas stations, and no law and order situation, which at times we have seen in some of the countries."

He added that unless the government saw "an absolute dire need", it would not be procuring spot cargoes on the LNG front, which tend to be far more expensive than previously contracted shipments.

Since the United States and ally Israel launched the war on Iran in February, global energy prices have surged as Tehran's retaliatory action has targeted Washington's Gulf allies and curtailed oil and gas supplies.

With Yemen's civil war flaring back to life as well, the Houthis there have repeatedly attacked Saudi infrastructure, including energy facilities and airports, in recent days.

Aurangzeb expressed alarm at the escalation, saying damage to such sites would delay a return to economic normalcy.

"What is now (the) worrying part of it is when the energy infrastructure starts getting hit," he said.

"I, to be very honest, I don't know where that would go. But one thing is very clear: that if the infrastructure continues to get hit, the return to normalcy, even if things subside, will take longer."

- 'Pushback' -

Pakistan has been a frequent customer at the International Monetary Fund (IMF), the lender of last resort to countries on the brink of default.

It is currently in the midst of its 25th program with the Fund -- at least 11 of which have been outright bailouts -- since gaining independence in 1947.

The current program totals around $7 billion over three years, with the Fund reaching an agreement this month to release a $1.2 billion tranche.

With global debt stocks running high, the Fund has called at this year's annual meetings on all economies, even those most vulnerable to the Iran war shock, to engage in fiscal consolidation to avoid a potential crisis.

"Fortunately for us, we have been on this fiscal consolidation path for a while," Aurangzeb said with a rueful smile.

The country's tax revenues have grown significantly in recent years, and the finance minister said the government was targeting the theft of taxes by private sector businesses that collected sales tax from consumers but never deposited it in government accounts.

Such theft accounted for billions of dollars, Aurangzeb said, adding that there remained "room for improvement" on increasing income tax collection as well.

He said the government's reform agenda had faced resistance from industry, lobbying groups and vested interests.

"Every reform, everything that you try to do when you try to change the status quo, there is pushback," he said.

One of the major pillars of the IMF's program criteria is privatizing state-owned assets in Pakistan, where the military runs a vast empire of businesses in sectors from real estate to fertilizer.

Asked about those companies, Aurangzeb denied that they were receiving state funding.

"As far as we are concerned, whichever commercial enterprises (the military) are running, they are running on a standalone basis and profitable on their own basis," he said.

"So, I can confirm to you, we are not providing any funds from the exchequer."

Pakistan's military has directly ruled the country for roughly two-fifths of its history, and under current army chief Field Marshal Asim Munir it has tightened its grip over key pillars of power, even as a civilian government remains nominally in charge of the state.