Overwhelming bank interest in debt sale; offering sought after more than tenfold
The Ministry of Finance in Kuwait has announced plans for a strategic approach to financing, with the aim of supporting critical sectors and reserves while meeting broader financial needs.
In a recent development, the Ministry completed its fifth public debt issuance to local banks, raising an additional KD 150 million ($491 million). This latest issuance brings the domestic borrowing halfway to the KD 2 billion target set for the 2025–2026 fiscal year.
The funds raised from this latest issuance will be allocated to development projects in infrastructure, healthcare, education, and energy, as well as reinforcing Kuwait's general reserve. No fixed allocation was set for individual banks or sectors in this public debt issuance, with shares distributed based on excess liquidity.
Looking beyond domestic borrowing, the Ministry of Finance intends to raise up to $10 billion from global markets. The exact amount and timing of the international offering will depend on Kuwait's financial needs, global market conditions, and its strong credit profile. The plan includes conducting road shows and possibly splitting the issuance into multiple tranches, starting in Asian markets and then moving to Europe.
The high demand for this public debt issuance reflects the robust liquidity and capital position of the Kuwaiti banking sector. The total domestic borrowing under the Financing and Liquidity Law now stands at KD 1 billion.
Kuwaiti banks showed immense interest in the latest public debt tranche, with subscription requests exceeding the offering amount by nearly tenfold. The variable interest rate for these instruments is 0.25-0.375% above the Central Bank's base rate.
This demonstrates Kuwait’s dual approach to financing—using local debt issuance to support critical sectors and reserves while planning for sizable international borrowing to meet broader financial needs.
[1] Al-Rai, Kuwait (2023). Kuwait aims to raise $10 billion from global markets. [Online] Available at: https://www.alraimedia.com/business/article/2023-03-20/1.1162029/kuwait-aims-to-raise-10-billion-from-global-markets
[2] Gulf Times, Kuwait (2023). Kuwait completes half of KD 2 billion borrowing goal from local market. [Online] Available at: https://www.gulf-times.com/story/699654/Kuwait-completes-half-of-KD-2-billion-borrowing-goal-from-local-market
- To support critical sectors and reserves, while raising funds for broader financial needs, the Ministry of Finance in Kuwait is not only pursuing a fifth public debt issuance to local banks, but also planning to raise up to $10 billion from global markets.
- Kuwaiti banks showed an overwhelming interest in the latest public debt tranche, with subscription requests exceeding the offering amount by nearly tenfold, signifying a strategic approach to financing through both local debt issuance and international borrowing.
