What is Long-Term Debt?
Long-term debt comprises borrowings whose repayment is due more than 12 months after the balance sheet date, classified as non-current liabilities and including bank term loans, sukuk, bonds, and the long-term portion of lease liabilities.
How It Works
- Original maturity > 12 months from the balance sheet date.
- Current portion of long-term debt = principal due within 12 months (reclassified to current).
- Interest expense recognized using the effective interest method.
- Covenants and security disclosed in the notes.
Saudi Context
Saudi long-term debt sources include bank term loans (typically 3 to 7 years), SIDF subsidized loans (up to 20 years for industrial projects), and sukuk listed on Tadawul (3 to 10 years). Most facilities are SAIBOR-linked, and SAMA requires banks to disclose long-term debt maturity profiles in their pillar 3 disclosures.
Example
A Saudi company holds SAR 30,000,000 in long-term bank debt with annual principal repayments of SAR 5,000,000. Balance sheet: SAR 5,000,000 current portion + SAR 25,000,000 non-current long-term debt.