Saudi Arabia’s Debt Market Reforms Aim to Boost Accessibility and Growth
In a move to make it easier for development funds, banks, and sovereign wealth organizations to tap into Saudi Arabia’s debt market, the Kingdom’s Capital Markets Authority has proposed a new set of reforms. These changes, which are currently open for public opinion, are designed to enhance market accessibility and stimulate growth by simplifying regulations for issuing debt instruments such as sukuk.
The goal of these reforms is to accelerate financing for companies, lower issuance costs, stimulate more offerings, and establish the debt market as a primary channel for financing businesses and the economy. This aligns with Saudi Arabia’s focus on advancing its financial sector to attract private and foreign institutional investors for financing critical projects under Vision 2030.
According to Mohammed El-Kuwaiz, chairman of the CMA, the market for sukuk and debt instruments is crucial for financing public and private sector projects. The proposed amendments aim to meet the financing needs of entities and diversify their funding sources to contribute to the development of the national economy.
S&P Global highlights the importance of the debt market’s growth, driven by foreign currency issuance and local currency market expansion, in meeting growing financial requirements. With Vision 2030’s economic transformation goals, Saudi Arabia’s debt market evolution is expected to surpass developments in some mature markets, with government-related entities, major financial institutions, and prominent corporate entities leading the way.
The new amendments will enable financial institutions in the Kingdom to issue debt instruments under specified exemptions, strengthening both the sukuk and debt instruments market. These changes also aim to streamline the process by relaxing rules related to notifying the CMA and the timelines for such notifications in private offerings.
The CMA has called on all interested parties and investors to participate in the public consultation for the final version of the amendment. Feedback will be carefully considered and studied during the 30-day period ending on August 8, as reported by the Saudi Press Agency.