RIYADH: Saudi Arabia’s sukuk and bond issuances rose 2.8 % yr on yr in worth by the top of the ultimate quarter of 2023, reaching about SR758.8 billion ($202.34 billion), information issued by the Saudi Trade confirmed.
A current Tadawul report attributed the expansion to a rise within the listed sukuk and bonds issued by the federal government, constituting 70 % of the entire at SR529.8 billion.
Saudi traders held roughly 99 % of the listed holdings, with a traded worth of SR5.44 billion within the fourth quarter of 2023, whereas Gulf Cooperation Council traders contributed 0.2 % with a traded worth of SR3.96 billion. The remaining 0.8 % was distributed amongst overseas traders.
Saudi Arabia is concentrated on advancing its capital market by encouraging the non-public sector’s involvement and attracting overseas institutional traders to assist key initiatives within the nation.
The ratio of bonds and sukuk issuances to gross home product was 19.05 %, displaying a slight lower from 20.71 % within the corresponding interval of the earlier yr.
Whereas authorities issuances dominated the listed debt devices at 96 %, unlisted bonds, and sukuk have been equally divided between the federal government and company issuances, contributing 27.5 % to the entire.
Issuances of government-listed sukuk and bonds grew by 5.14 % throughout this era, whereas company issuances reached solely SR20 billion, reflecting a decline of 6.35 %.
Sukuk are Shariah-compliant monetary certificates via which traders achieve partial possession of an issuer’s belongings till maturity. However, bonds are monetary certificates via which traders lend cash to the issuer, indicating an obligation for compensation at maturity.
Bondholders obtain common curiosity funds, whereas sukuk holders obtain a share of the revenue generated by the underlying asset.
Listed bonds and sukuk issuances accounted for 13.81 % of the GDP, reflecting a marginal decline from 14.74 % within the corresponding quarter of 2022. In the meantime, unlisted debt devices comprised 5.16 % of the GDP, down from 5.63 %.
The Saudi Trade launched its debt market in 2018 with the itemizing of a number of major and secondary authorities debt devices. The bourse’s debt market has since grown into one of many largest within the area and several other enhancements have been made.
Based on the Tadawul report, roughly 86 % of the listed issuances primarily encompass fastened rates of interest, whereas unlisted issuances comprise 67 % with fastened charges and 33 % with floating rates of interest.
The highest three market contributors within the final three months of 2023 have been Riyad Financial institution, SNB Capital, and Al Rajhi Capital. Nearly all unlisted holdings lie with Saudi traders with a traded worth of SR238 million within the remaining quarter of 2023
In January, the Nationwide Debt Administration Middle of Saudi Arabia launched its Annual Borrowing Plan Report for 2024, presenting the Kingdom’s financing methods for the upcoming yr.
The report highlighted the accomplishments of 2023, serving as a strong foundation for the Kingdom to uphold fiscal stability and leverage alternatives within the coming yr. Saudi Arabia stays dedicated to sustaining a conservative debt-to-GDP ratio, aiming to forestall extreme borrowing prices on its monetary system and preserving flexibility for future borrowing wants.
Based on economist Talaat Hafez, the Kingdom’s dedication to a strong and sustainable debt profile is emphasised by its strategic debt administration initiatives, cautious threat administration strategy, and investor relations technique.
“Saudi Arabia’s excessive credit standing with a constructive outlook from Fitch, Moody’s, and S&P displays its robust credit score place. This score has bolstered the Kingdom’s monetary capability and demonstrated a steadfast dedication to assembly mortgage funds with out default,” Hafez added.
