By Hadeel Al Sayegh and Federico Maccioni
DUBAI (Reuters) -Gulf issuers, including Saudi Arabia’s $925 billion sovereign wealth fund, are working on a round of bond offerings, according to sources, braving debt markets despite recent turmoil ignited by U.S. President Donald Trump’s tariff policies.
Markets have been volatile since Trump announced sweeping tariffs on April 2, even after he rolled most of them back, as investors struggle to gauge where his policies are headed.
Saudi Arabia’s Public Investment Fund (PIF) is seeking to raise between $1.5 billion and $2 billion with a sukuk, or Islamic bond, in coming weeks, according to two sources with direct knowledge of the matter. The fund has already raised $11 billion this year.
Its push comes as the kingdom faces mounting pressure to raise debt or cut spending after a plunge in crude prices which threatens to erase tens of billions of dollars off its budget.
"In the Middle East, the main concern is oil prices, but both corporates and governments have very strong fundamentals, reserve increase, everything’s doing well," Zeina Rizk, co-head of fixed income at Amwal Capital Partners, told Reuters.
Abu Dhabi Ports Company is looking to raise $2 billion in the coming weeks, the two sources said.
Meanwhile, renewable energy firm Masdar is aiming to raise $1 billion from a green bond, one of the sources said, which was confirmed by a third person.
However, plans were not yet finalised, the sources added.
"While we do not comment on market speculation, we have stated our intention to be a repeat issuer of green bonds to fund our ambitious pipeline of international greenfield projects, subject to market conditions," Masdar said in a statement.
PIF declined to comment and AD Ports was not immediately available for comment.
State-owned firms in Saudi Arabia and the United Arab Emirates have been raising debt in recent years to finance a spree of acquisitions abroad as part of government mandates to build national champions and diversify economies.
However, recent bond market turmoil means issuers face higher borrowing costs.
Rizk of Amwal Capital Partners said she was not concerned provided markets remained relatively stable as they were last week.
"There is appetite," she said, adding Dubai’s Mashreqbank’s launch of a $500 million sukuk last week was a good indicator.
The sources said Saudi Arabia’s Banque Saudi Fransi (BSF) also aims to raise funds from an above benchmark bond this week. Saudi National Bank raised $750 million through a dollar-bond issued in Taiwan in March.
BSF was not immediately available for comment.
Banks in Saudi Arabia have played an instrumental role in financing giga-projects such as NEOM, Qiddiya and Red Sea projects, collectively requiring hundreds of billions of dollars in funding.
Fitch forecasts 2025 Saudi banking sector credit growth of 12% to 14% with lending growth continuing to outpace deposits, further widening the deposit gap which was forecast at 0.3 trillion riyals ($79.96 billion) in 2024.
($1 = 3.7517 riyals)