Saudi Corporates Expected To Boost Cross-border Bond Issuance As Funding Needs Grow – Report

The report, Saudi Corporates Will Eye Cross-Border Issuance To Fund Investments As Banks Turn To External Debt, projects that corporate capital spending will average between US$85 billion and US$95 billion annually from 2025 to 2027. While many large companies can fund part of this investment through their own cash flow, demand for bank loans and international bond markets is set to remain strong.

Around 90 per cent of this projected spending is expected to come from state-owned enterprises (SOEs) and their subsidiaries, many linked to the Public Investment Fund (PIF). The agency notes that this concentration should help sustain corporate borrowing capacity while also increasing overall market activity.

S&P expects Saudi Arabia’s economy to grow at an average of 3.5 per cent between 2025 and 2028, supported by higher oil production and solid non-oil sector performance. Corporate profitability is forecast to remain stable despite lower oil prices and moderate domestic inflation, with ongoing cost rationalisation and diversification underpinning earnings.

The report also highlights that Saudi banks will play a major role in financing this expansion, but will increasingly rely on external debt to do so. Net external debt is expected to rise to around 6 per cent of total loans by the end of 2026, compared with 1 per cent in 2024. This trend reflects slower deposit growth and stronger demand for corporate credit, which will likely be met through greater use of international borrowing and interbank funding from within the GCC.

Corporate activity in international debt markets has already accelerated. Since 2017, Saudi non-financial firms have issued approximately US$78.6 billion in foreign-currency bonds. The majority of this total (around 91 per cent) has come from SOEs or their subsidiaries, led by Aramco’s US$43 billion in issuances.

Private sector issuance remains limited at roughly US$7 billion, but S&P expects this share to grow gradually as more companies seek to diversify funding, lengthen maturities, and access global investors.

The study suggests that Saudi Arabia’s ongoing legal and regulatory reforms, improved corporate governance, and the stability provided by the riyal’s peg to the US dollar are enhancing the country’s appeal to international lenders. Combined with the growing popularity of sukuk among Asian and Middle Eastern investors, these factors are likely to support a continued rise in cross-border funding.

S&P concludes that as Vision 2030 projects progress, both corporates and banks will rely increasingly on global capital markets to finance expansion, reflecting the next stage of Saudi Arabia’s economic transformation.