RIYADH: Saudi Arabia’s Debt Capital Market is expected to hit $500 billion by the end of 2025, fueled by the Kingdom's economic diversification efforts under Vision 2030, according to Fitch Ratings.
In its latest report, Fitch highlighted several factors contributing to this growth, including the government’s need for deficit funding, maturing obligations, and continued reforms.
The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.
Fitch also noted that the DCM in the Gulf Cooperation Council region had surpassed the $1 trillion mark by November 2024, bolstered by strong oil revenues. The agency predicts continued growth, with the GCC region expected to remain one of the largest emerging-market issuers of dollar-denominated debt through 2025.
“Saudi Arabia’s sukuk market maintains a strong credit profile, with 97.4 percent of Fitch-rated Saudi sukuk rated investment-grade and 98 percent of issuers holding a stable outlook. Notably, no Fitch-rated Saudi sukuk or bonds defaulted in 2024,” said Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings.
He added: “2025 has started strong, with a growing pipeline of issuances. We expect the market to surpass $500 billion by year end, driven by Vision 2030 initiatives, robust government support, and favorable funding conditions.”
Fitch’s analysis further said that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (outside of China) and the world’s largest sukuk issuer in 2024. The Kingdom’s DCM grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.
The report also emphasized the increasing importance of environmental, social, and governance debt in the region, with $18.6 billion in outstanding ESG-related bonds in 2024.
Saudi banks have significantly expanded their international DCM activities since 2020, aligning with their growth strategies and foreign-currency requirements. Additionally, corporates are diversifying their funding sources, moving beyond traditional bank loans, according to Fitch.
In another report, Fitch projected that global ESG sukuk issuances will exceed $50 billion in outstanding debt by 2025, driven by major Islamic finance markets like Saudi Arabia and Indonesia. The agency noted a 23 percent year-on-year growth in global ESG sukuk, which reached $45.2 billion in 2024, outpacing the 16 percent growth in global ESG bonds.
