Saudi Arabia’s SEC Completes $2.8 Billion Sukkuk Offering

Saudi Electricity Company (SEC) has said that it has completed a $2.8 billion dual-tranche sukuk offering on the London Stock Exchange (LSE). The senior unsecured, USD-denominated issuance was structured through a special purpose vehicle (SPV), it said in a disclosure to Saudi Exchange Tadawul.

SEC said that the offering featured a five-year tranche of $1.5 billion with an annual yield of 5.225% and a 10-year green tranche of $1.25 billion with an annual yield of 5.489%. Around 13,800 sukuk certificates were issued, each with a nominal value of $200,000.

The proceeds from the offering will be used to fund SEC’s general business needs, including infrastructure and development costs. Part of the proceeds will be allocated to renewable projects that align with the company’s Green Sukuk Framework, SEC said in the diclosure.

According to State-owned Saudi Press Agency (SPA), the green tranche is SEC’s fourth offering under its Green Sukuk Framework, through which the company has raised $3.8 billion since the program launched in 2020.

It may be recalled that SEC signed an MOU with Italy’s state export credit agency Sace early this year to explore credit guarantees to SEC for new sustainable projects, to develop the Saudi electricity system in collaboration with Italy’s EPC and O&M service providers.

GCC Leads in USD Issuers

Driven by the government initiatives to develop debt credit markets (DCM), diversification goals, funding deficits and projects, and sizeable upcoming maturities, the GCC countries are likely to be among the leading emerging-market (EM) US dollar debt issuers in 2025 and 2026, along with being some of the largest dollar sukuk issuers and investors globally, the US credit rating agency Fitch Ratings said.

The GCC DCM crossed the milestone of $1 trillion outstanding till 31 January 2025 (all currencies), up about 10% y-o-y. GCC banks are likely to issue over $30 billion of USD debt in 2025, and large GCC corporates are also starting to issue sukuk and bonds to diversify funding.

“However, the landscape is still fragmented and evolving, with Saudi Arabia and the UAE being the most mature markets. No Fitch-rated GCC sukuk or bond defaulted in 2024,” the agency said.

Saudi Arabia had the largest share of the GCC DCM outstanding (44.8%), followed by the UAE (29.9%) and Qatar (12.8%), and the rest shared by Bahrain, Oman, and Kuwait for all currencies. Falling oil prices could lead to further DCM growth as lower government revenues could lead to increased borrowing.

Fitch expects lower US FED interest rates in 2025, with GCC central banks likely to follow suit, which should create a favourable funding environment. Four out of six GCC sovereigns are investment-grade.

The GCC countries accounted for a quarter of all EM US dollar debt issued in 2024 (excluding China), with Saudi Arabia, Turkiye (non-GCC country), and the UAE being the largest EM issuers. GCC US dollar DCM issuance expanded 65.8% y-o-y in 2024 to $133.4 billion. New GCC fund passporting regulations could enhance DCM investment opportunities.

Sukuk are a significant funding tool, accounting for about 40% of GCC DCM outstanding as on 31 January 2025, with the rest in bonds. Just over 40% of global sukuk were from GCC countries.

Saudi Arabia’s and the UAE’s DCMs are set for growth in 2025. In 2024, Kuwait became the GCC’s third-largest dollar debt issuer in 2024, with a total of $13.6 billion issuances, led by the domestic banks.

This is despite the absence of the public debt law, which would enable sovereign borrowing. Historically, US dollar issuances from Kuwait have been sporadic and rare, with only $11.8 billion issued in 2018–2023.