The combined value of five major giga projects, NEOM, Qiddiya, Red Sea Global, ROSHN and Diriyah, is expected to exceed USD 1 trillion at completion, despite the recently announced recalibration of some projects, credit ratings agency Fitch said in its latest report. However, the study also noted that roughly USD 115 billion of giga-project contracts have been awarded since 2019.
“We estimate about half of their total funding, including debt and capital, has been financed by the Public Investment Fund. Recourse to bank borrowing is low but has been increasing. We expect banks’ giga-project financing to rise as projects approach operational phases and financing can be supported by cash flows,” the rating agency said.
Fitch estimates that bank financing to giga projects was a modest 5%-7% of average sector loans at end-2025. New project awards fell by almost 50% in 2025, but the value of contracts awarded since 2022 is about USD 435 billion, providing significant business opportunities for banks. This should put total exposure to giga projects, both on- and off-balance-sheet, below 10% of the sector’s combined credit risk, the report claimed.
“Delays in giga-project execution or substantial recalibration of their scale could affect the banking sector’s asset-quality metrics in the longer term. However, current low exposure means the projects are unlikely to lead to significant increases in system-wide Stage 2 and Stage 3 loan ratios in 2026-2027,” the report said.
Fitch expects financing requirements for broader “Vision 2030” diversification projects to translate into sustained strong bank loan growth, despite the announced recalibration.
“This will, in turn, drive greater diversification of Saudi banks’ funding sources, underpinning further growth of Saudi Arabia’s debt capital markets, including international issuance,” the agency continued, while adding, that Saudi banks’ exposure to these giga-projects remains modest but is likely to rise as some projects become operational.
“We expect banks’ giga-project financing to rise as projects approach operational phases and financing can be supported by cash flows. We believe this type of financing mostly carries risk-weighting of around 80%-130%, so greater lending to these initiatives could weigh on capital. This, coupled with more stringent capital regulation, could encourage banks to make greater use of tools such as residential mortgage-backed securities (RMBS) and significant risk transfers (SRTs) to relieve pressure on capital ratios, or to adjust their dividend payouts,” Fitch remarked.