Saudi Seeks $8B Loan as War Strains Finances

Riyadh Sounds Out Banks for at Least $8 Billion as War Disrupts Trade and Drags on Finances

Saudi Arabia has quietly approached banks to gauge interest in a loan of at least $8 billion as wartime disruptions and higher import costs strain public finances, people familiar with the outreach said. The National Debt Management Center (NDMC), part of the finance ministry, is leading the effort, and state-backed Saudi Aramco has held separate, very early talks with lenders — although both potential transactions remain preliminary and may not proceed.

"NDMC representatives were unavailable, and Aramco declined to comment."

The outreach comes amid a sharp economic slowdown and a widening budget gap. The kingdom posted a second-quarter deficit of 34.3 billion riyals, roughly $9.1 billion, and the economy contracted at its steepest quarterly pace since the pandemic. Attacks on energy infrastructure and threats to shipping, including strikes tied to tensions in the Strait of Hormuz and Houthi activity in the Red Sea, have lifted import costs and tightened supply chains, contributing to a near 25% drop in the oil sector in the quarter.

• Loan size being explored: at least $8 billion.
• Second-quarter deficit: 34.3 billion riyals ($9.1 billion).
• Average Benchmark Brent so far this year: about $87 a barrel.
• Recent NDMC syndicated loan (late last year): $13 billion with a seven-year tenor.
• Domestic and international bond sales this year: roughly $6 billion raised by the kingdom; Aramco added about $4 billion.
• Sovereign Wealth Fund (Public Investment Fund) assets: roughly $900 billion; it raised $7 billion in May.

The NDMC has previously leaned on non-public funding as it diversifies funding sources. In May the agency said it had completed the year's funding program and covered about 90% of requirements, adding that any additional cash would be sourced chiefly via private placements and domestic venues. Late last year the NDMC arranged a $13 billion syndicated loan with a seven-year tenor — an uncommon step that underlined a drive to access broader pools of capital to advance the Crown Prince Mohammed bin Salman agenda of economic diversification.

Aramco has also been active in debt markets, raising about $4 billion this year and signaling plans to introduce additional instrument types to widen its investor base. Bloomberg and other reporting have suggested Aramco's privatization initiative could ultimately fetch up to $35 billion, and the company has stated it intends to stay engaged in debt markets. The Public Investment Fund, with roughly $900 billion under management, unveiled a new five-year strategy that calls for transferring mature assets to private owners, pursuing listings and divestments, and relying more on outside capital.

Despite wartime headwinds and a recalibration of mega-project spending, Saudi entities continue to deploy capital globally — from gaming and electric vehicles to a €6 billion theme-park project near Paris. Higher oil prices have provided some relief: Benchmark Brent crude has averaged about $87 a barrel so far this year, which eases pressure on the budget but leaves the kingdom exposed to shipping and geopolitical risks.

Outlook: officials and investors will watch whether the NDMC and Aramco proceed with the early talks and how markets receive any new issuance. A successful placement would broaden Saudi funding sources amid an environment of elevated geopolitical risk; failure to secure favorable terms could sharpen the kingdom's focus on domestic placements, private placements and continued use of sovereign-vehicle liquidity to bridge near-term gaps.