§ The plan includes the issuance of local debt instruments and debt instruments in foreign currencies.
§ The plan aims to finance government deficit, projects, and infrastructure.
§ NDMC seeks to diversify government finance sources, broaden the investor base, and capitalize on the available financing opportunities.
HE Mohammed bin Abdullah Al-Jadaan, the Minister of Finance and Chairman of the Board of Directors of the National Debt Management Center (NDMC), announced the conclusion of the annual borrowing plan proposed by NDMC for the year 2021, with financing amount around SAR 125 billion. The plan is part of the public debt strategy adopted to meet the financing needs, and seize the opportunities available in local and global markets, and manage potential risks.
Al-Jadaan highlighted that NDMC's board of directors has approved the proposal of the annual borrowing plan at the beginning of the year. The plan covered the financing needs by issuing debt instruments for about SAR 125 bn, including Sukuk and bonds, which focused on fixed-rate instruments to hedge against risks of potential interest rate fluctuations. Al-Jadaan indicated that NDMC succeeded in arranging the issuance of sovereign bonds worth EUR 1.5bn , with the largest negative yield issuance ever Out of the EU, with a coverage ratio of 3.3 times (equivalent to 5bn euros) of the total issuance, which displays the leading position of the Kingdom in global markets. On another front, NDMC successfully arranged for financing of USD 3 bn provided by Korea Trade Insurance Corporation (KSURE) earlier this year. Additionally, NDMC arranged as well the second early repurchase of part of bonds and sukuk maturing next year (2022) of a value exceeding SAR 33 billion.
Al-Jadaan added that 2021 financing was comprised into (60.5%) locally and (39.5)% international in accordance with the approved annual borrowing plan of the year, indicating that a suite of financing channels have been developed, including, government alternative funding, early repurchase of local government issuances, and structuring the green financing framework are within the new initiatives and financing channels that the Ministry of Finance and NDMC are working to launch during next year. His excellency concluded by highlighting the Kingdom's credit rating, which Has been revised in terms of outlook by credit rating agencies to be “stable". This testifies to the efficiency of fiscal system, its ability to overcome challenges, its forward-looking approach, and its efforts in developing plans to address these challenges.
In this regard, the Acting CEO of NDMC, Hani bin Medaini Al-Medaini, stated that NDMC is working to broaden the investor base, open communication channels with the investors locally and internationally, and to penetrate to new geographical regions. He added that NDMC is working with international financial institutions for joining the Primary Dealers Program of the Government Local Debt Instruments, and attracting new foreign capitals to utilize the opportunities available in debt instruments arranged by NDMC, and seizing opportunities in local and international markets.