Sukuk outlook: Saudi could double issuances to $40bln in 2020 to plug fiscal deficits | ZAWYA MENA Edition:
COVID-19 has triggered a sharp decline in global oil demand and prices, eroding Saudi Arabia's revenue and leading to a significant widening of the fiscal deficit. Global ratings agency Moody's estimates that the deficit will reach nearly 11 percent of GDP in 2020, up from 4.5 percent of GDP in 2019, and will drive a commensurate increase in the government's gross financing need, at least half of which can be salvaged by issuing sukuks.
Moody's also stated that the financing requirement will rise to around SAR 318 billion ($85 billion) in 2020 from SAR 153 billion ($41 billion) in 2019, and nearly half of the total financing will come from sukuk issuances, including through the established domestic sukuk program as well as private sukuk placements with autonomous government institutions (AGIs).
Moody's expects gross government sukuk issuance to nearly double this year to around $40 billion, up from $21 billion in 2019.
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