Saudi Arabia kicked off the sale of a euro-denominated green bond, the first such deal from a sovereign in the region, as it looks to fund the kingdom’s ambitious economic-transformation plan.
The seven-year green note is being marketed at around 155 basis points over mid-swaps, according to a person familiar with the matter, who asked not to be identified discussing private information.
It’s being sold alongside a 12-year conventional bond that’s been offered at around 175 basis points over mid-swaps, the person said.
The green offering is a first for the Saudi central government as the world’s top oil exporter looks to reach net zero emissions by 2060. The Saudi sovereign wealth fund known as the PIF started issuing green debt in 2022.
Elsewhere in the Middle East and North Africa, countries including Qatar, Israel and Egypt have issued dollar-denominated green debt. Saudi Arabia’s offering is the first in euros from a regional sovereign, according to data compiled by Bloomberg.
Proceeds from the sale are expected to help fund projects that drive the kingdom’s sustainability agenda, which includes planting 10 billion trees and protecting 30% of Saudi Arabia’s land and sea by 2030.
The sale is the latest from the kingdom in a flurry of offerings being done to help plug an expected budget deficit. The government has forecast fiscal shortfalls through at least 2027 as it prioritizes spending on Crown Prince Mohammed bin Salman’s drive to diversify the economy away from oil.
The Saudi sovereign sold $12 billion of notes last month and the PIF, tasked with driving much of the diversification push, has also been an active borrower.
The government mandated HSBC, JPMorgan and Societe Generale as the main banks for Tuesday’s offering.
