The Scoop
Saudi Arabia’s National Development Fund is planning to start raising debt from capital markets in the next two years, its top executive told Semafor, widening an issuance spree that has already made the kingdom one of the biggest borrowers in emerging markets.
While many are focused on the future of Saudi Arabia’s giga-projects, the National Development Fund aims to support the kingdom’s “economy of today,” Governor Stephen Groff said in an interview. To that end, the fund — which oversees $430 billion across 12 sector-specific funds and banks — is looking to tap capital markets, Groff said, as the kingdom looks to expand private investment in tourism, housing, logistics, and small to medium-sized businesses. NDF has designated a capital markets team, is preparing to obtain a formal credit rating, and could begin issuing bonds within 18 to 24 months, he added.
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NDF was set up in 2017 to centralize and scale the kingdom’s development financing, bringing together legacy financing programs spanning industry, agriculture, and social development. Its launch created new entities for financing infrastructure, cultural projects, and SMEs. Its board, chaired by Crown Prince Mohammed bin Salman, includes 14 ministers. The fund now plays a dual role of providing strategic coordination across sectors, and as an investor in local projects.
Though the NDF’s mandate overlaps with the Public Investment Fund, Saudi Arabia’s sovereign wealth fund — and the two regularly co-invest, including in the NEOM Green Hydrogen project — Groff said he sees NDF as complementary to the PIF’s heft. “There’s a whole new ecosystem of small businesses that didn’t exist before,” he said. “You walk into a coffee shop now and see something you didn’t have here eight years ago.”
Last week, NDF and affiliate funds signed $1.6 billion worth of financing agreements in sectors such as agriculture, infrastructure, tourism, and local talent development. Other deals aim to expand AI and data use in development finance, and promote local manufacturing in the railway industry.
Groff said the fund is moving quickly to reduce its reliance on direct spending and expand its toolkit. “Our capital markets strategy is a major evolution,” he said.
Step Back
For a second year, debt sales by Saudi entities including the government, PIF, Aramco, and many of the banks have made the country one of the biggest debt issuers among emerging markets. But authorities argue that the central government’s debt-to-GDP ratio is still low, at about 30%, giving it ample room to continue borrowing.
Notable
- The National Development Fund contributed about $12.53 billion to non-oil GDP in 2024, which it said demonstrated how development finance was being used to grow the non-oil economy rather than just fund projects.
- Saudi Arabia is in talks with global banks to raise up to $10 billion in a rare sovereign loan, signaling a push to diversify its financing toolkit beyond bond markets as it funds a costly economic overhaul amid lower oil prices and a widening budget deficit.