Sign in
A fresh hunt for funds by Neom: Neom is planning a SAR-denominated bond sale in what could be the gigaproject’s first-ever sukuk sale, Bloomberg reported, citing sources it says are close to the matter. The moves comes as Neom looks to diversify its funding sources and accelerate the pace of construction for its USD 500 bn development.
What we know: The sources said the offering could raise up to SAR 5 bn and could come as soon as 2H 2024, subject to market conditions.
The rationale? The Public Investment Fund has poured most of the funding into the project in the form of equity. The city’s developers are looking to diversify their sources of funding. The business information service says Neom secured a SAR 10 bn facility from a number of local lenders, while Sindalah, its luxury island destination, has taken on an additional SAR 3 bn in debt.
ADVISORS- Our friends at HSBC and the securities units of Al Rajhi Bank and the Saudi National Bank are said to be advising on the sukuk sale.
The PIF is also looking to tap global debt markets: The fund is reportedly considering more global bond sales and IPOs as it looks to ramp-up pace of investment. The move comes as the PIF is stepping in as the Kingdom’s treasury prepares to run deficits through 2026 and pace out the implementation of some aspects of select Vision 2030 projects. It plans to ramp up annual deployment capacity to USD 70 bn a year starting 2026, up from a current annual spending clip of USD 40-50 bn. The PIF has raised USD 7 bn since the start of the year in two global debt sales.
Why international markets? Officials at multiple levels of government and the PIF have repeatedly said in recent months that they don’t want to crowd private business out of the domestic debt market — and international appetite for the Saudi story is high.
It’s been all about Neom in the past few weeks: Bloomberg said earlier this month that planners had scaled back their estimate for how many people would live in Neom’s flagship project, The Line, by 2030, saying it would come in at a bit under 300k compared to the original 1.5 mn. That suggested a slower buildout with at least one of the contractors working on the project set to lay off some of the workers on site, the business information service wrote.
Neom has pushed back on the report — it brought in some 100 global construction firms earlier this week to assure them that the build-out plan remains unchanged.
Chinese interest? Neom officials yesterday marketed potential investments to Chinese companies while attending a construction forum in Shanghai. More than 100 Chinese contractors attended the session, part of Neom’s global “Discover Neom” tour.
