Saudi Arabia appoints, HSBC, National Bank to issue NEOM bonds
Saudi continues to develop range of funding sources for NEOM
Saudi Arabia's NEOM, a futuristic $1.5 trillion desert city project, is seeking additional funding sources, including a planned debut riyal bond sale later this year, according to people familiar with the matter.
Neom has appointed several banks, including HSBC Holdings, the securities units of Al Rajhi Bank, and Saudi National Bank, to advise on the potential issuance of Islamic bonds, or sukuk, denominated in the local currency, according to people speaking with Bloomberg on April 17.
The sale if it goes ahead could raise as much as SAR5 billion ($1.3 billion), though the final decision on timing and size will depend on market conditions.
The city, a brainchild of Crown Prince Mohammed bin Salman, has so far been primarily funded through equity injections from Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), which is led by the Crown Prince.
However, to support the ambitious development plans, Neom's developers have been seeking new sources of financing.
The latest announcement comes days after Neom executives travelled to Hong Kong and China to drum up support and investment in the project, according to our own reporting on the ground.
Shawn Cai of Meddcom, who was at the event, said: “In the current situation where Western media generally denigrates NEOM's new future city, Saudi Arabia chose this moment to conduct a foreign visit and chose Beijing, China, as its first stop.”
He added, “I believe that in the near future, with the support of Chinese companies, wonders embodying the wisdom of all mankind will stand in this desert.”
In recent months, Neom has secured a 10 billion-riyal loan from a group of Saudi banks and a 3 billion-riyal loan to finance Sindalah, a luxury tourism island in the Red Sea. Bloomberg reported earlier.
Other unknown sources speaking with the US agency earlier said the Kingdom has scaled back its medium-term ambitions for The Line, a signature Neom project involving a pair of mirror-clad skyscrapers stretching 170 kilometers.
However, as our substack has previously noted, the Line groundwork continues while other projects, including the Trojena ski resort, come online beforehand.