(Bloomberg) -- Saudi Arabia’s Neom is planning its debut riyal bond sale for later this year as it looks for more sources of funding for the $1.5 trillion worth of construction projects it’s planned for the futuristic city, according to people familiar with the matter.

Neom has appointed banks including HSBC Holdings Plc and the securities units of Al Rajhi Bank and Saudi National Bank to advise on the sale of Islamic bonds, or sukuk, the people said. The debt would be denominated in the local currency and could raise as much as 5 billion riyals ($1.3 billion), they said, asking not to be identified as the information is private.

The sukuk sale could come as early as the second half of this year, the people said. A final decision on the timing and offering size will depend on market conditions, they added.

Representatives for Neom, HSBC and Saudi National Bank declined to comment, while a spokesperson for Al Rajhi Bank did not respond to a request for comment.

The city, located in the kingdom’s northwestern desert, is a brainchild of Crown Prince Mohammed bin Salman. The development’s signature project is The Line, a pair of mirror-clad skyscrapers that the kingdom hopes will ultimately stretch 170 kilometers and house all of a city’s normal functions. Neom’s plans also include an industrial area, ports and tourism developments. 

Most of the development’s funding so far has come in the form of equity injections from its owner, Saudi Arabia’s sovereign wealth fund, which is led by Crown Prince Mohammed. But to pull off the ambitious project, Neom’s developers have been hunting for new forms of cash in recent months. 

Neom recently secured a 10 billion-riyals loan from a group of Saudi banks, according to two other people familiar with the deal. The project’s developers have also raised a 3 billion-riyal loan to finance Sindalah, a luxury tourism island in the Red Sea.

Scaling Back

Saudi Arabia has scaled back its medium-term ambitions for The Line, people familiar with the matter told Bloomberg earlier this month. While the government at one point hoped to have 1.5 million residents living in The Line by 2030, it now expect the development will house fewer than 300,000 residents by that time. 

The plans to pursue a sukuk sale comes as the Public Investment Fund, as the kingdom’s main state fund is known, has been considering plans to accelerate debt sales of its own and by its subsidiaries. The PIF has also considered obtaining bank loans or offering up equity in the companies it controls as it hunts for new sources of cash.  

The PIF’s effort to obtain more cash comes as total spending by the fund is set to top $70 billion a year after 2025, up from current levels of about $40 billion to $50 billion a year.

Read more: BlackRock’s Aggressive Hunt for Growth in Saudi Arabia

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