Bond and Sukuk Market Opened in the Kingdom

June 18, 2009 - Saudi Arabia has opened a regulated bond and sukuk (Islamic bond) market, the latest in a series of important reforms by the Saudi Capital Market Authority (CMA) aimed at liberalizing the Kingdom’s capital markets. Analysts say the measure comes at an opportune time, as loan-to-deposit ratios are exceeding the limit imposed by the central bank, and many Saudi banks are moving toward credit capacity. Bank loans extended in 2008 equaled the total of the previous two years, according to Muhammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency.

Four bond issues are currently available including those issued by Saudi Basic Industries Corporation and Saudi Electricity Corporation with a cumulative worth of $5.6 billion (SR21 billion). The action was a result of preliminary studies by the CMA in April 2009 in order to introduce “options, short-selling and futures” onto the Tadawul, the Saudi Arabian stock exchange, as well as traded funds.

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