The Clap
Sources told Bloomberg that NEOM is considering selling bonds in riyals “for the first time” this year. This comes as part of its efforts to diversify funding for its massive construction projects, valued at $1.5 trillion.
NEOM
The sources indicated that the unit owned by the Saudi Sovereign Wealth Fund has appointed banks to advise on the sale of Islamic bonds or sukuk. They also mentioned that the debt will be denominated in the local currency and could rise to 5 billion riyals ($1.3 billion).
The Sukuk is expected to be sold in the second half of the current year, with the timing and size of the offering depending on market conditions.
So What
Crown Prince Mohammed bin Salman launched the NEOM mega-project in 2017 as part of Saudi Vision 2030’s economic diversification agenda. It aims to transform the desert into an “innovative future city” in the northwest of the country, operating on 100% renewable energy.
Some Context
Most of NEOM’s funding so far has come in the form of equity injections from the Public Investment Fund. Developers of the ambitious project have been exploring new forms of financing in recent months to accelerate progress. They recently secured two loans, one worth 10 billion riyals from a group of Saudi banks, according to Bloomberg. The other was for 3 billion riyals to finance the luxurious Sindalah Island resort in the Red Sea.
