RIYADH: Saudi Arabia’s financing needs for 2022 will mainly focus on refinancing debt, which amounts to around SR43 billion ($11.5 billion), the National Center for Financial Management said. the Kingdom’s debt in a press release.

NDMC’s board of directors, chaired by Finance Minister Mohammed Al-Jadaan, approved the 2022 annual borrowing plan at its last meeting, the statement said.

The plan emphasized that the NDMC will continue to proactively monitor the market taking into account interest rate movements and seize opportunities that will improve the characteristics of the Kingdom’s debt portfolio.

According to the official 2022 budget statement, public debt is expected to remain at around SR 938 billion by the end of 2022.

“Based on market conditions throughout 2022 and while maintaining the current debt strategy, the government may consider additional tactical financing activities through available financing channels, domestically or internationally, including including debt capital markets and/or alternative government financing to finance opportunities that will promote economic growth such as capital expenditure and infrastructure financing,” the statement added.

Last December, the NDMC announced the completion of the 2021 Borrowing Plan, with total funding of SR125 billion. 60.5% of the debt contracted in 2021 came from local sources, while the remaining 39.5% was made up of international borrowings.

Last year’s borrowing plan included several funding channels, including the €1.5 billion euro-denominated bond issue, the largest negative-yielding issue ever executed outside the EU with a coverage rate of 3.3 times, according to NDMC.

A negative return occurs when an investor receives less money when the bond matures than the bond’s original purchase price. In other words, instead of receiving a return from the issuer, depositors pay the lender a net amount at maturity.

In addition, the NDMC executed an exchange operation of Sukuk and bonds maturing in 2022, with a total size exceeding SR 33 billion.

Last July, Fitch Ratings decided to revise the Kingdom’s outlook from negative to stable and confirmed its rating at ‘A’, reflecting “the outlook for less deterioration in key sovereign balance sheet metrics”, according to a report on their website.

Moody’s, another rating agency, also followed suit, raising the country’s outlook from negative to stable in November. It said on its website that “the government will reverse most of its rising debt burden in 2020 while preserving its fiscal reserves.”