Banking & Finance Saudi Arabia’s debt rule changes could increase sales By Matt Smith November 14, 2024, 6:05 PM Nael Shyoukhi/Reuters Saudi Capital Market Authority headquarters in Riyadh: the CMA announced rule changes on Wednesday Sukuk and bond rules simplified To attract ‘broader range’ of issuers Easing of prospectus requirements Saudi Arabia’s market regulator has simplified its sukuk and bond issuance rules in reforms that should boost debt sales by both domestic and international entities in Riyadh, a top Islamic finance expert told AGBI. The kingdom’s debt capital market had $408 billion of outstanding issuance as of June 30, up 18 percent versus a year earlier according to Fitch Ratings. This issuance is split almost evenly between dollar and riyal-denominated debt, the ratings agency estimates. The Capital Market Authority (CMA) on Wednesday announced wide-ranging changes to its debt issuance regulations. These “aim to stimulate sukuk and debt issuances to meet companies’ financing needs and diversify their funding sources”, Bashar Al Natoor, global head of Islamic finance at Fitch Ratings, said. “These changes are expected to attract a broader range of issuers, both local and international, thereby contributing to the growth of the national economy and further activating the sukuk and debt market as primary channels for financing businesses.” Investment banks enjoy fee windfall from debt issuance Banks vying to fund Roshn’s Saudi expansion Bond issuances to soar this year, says top Dubai banker The regulatory changes include easing prospectus requirements and simplifying the supporting documents needed to issue debt in Saudi Arabia, Natoor said. There are now separate rules for government debt sales, while private companies no longer need to wait to start the debt issuing process. “Local issuers can now notify the CMA and immediately begin the offering process, expediting access to financing,” said Natoor. Saudi Arabia’s $400 billion-plus in outstanding debt issuance positions the kingdom as “as a dominant player in the GCC region and reflects growing investor confidence”, said Natoor. Yet he added that Saudi’s debt markets remain plagued by a lack of diversity among issuers and a limited investor base. “The market is also exposed to oil price and interest rate volatility, the scale and use of issuance, and geopolitical risks,” Natoor said.
