Saudi Arabia’s sukuk and debt capital market has achieved an annual growth rate of 7.9 percent since 2019 with growth being most prominent in unlisted issuances, which have grown at an annual rate of 9.6 percent. The latest release from the Capital Market Authority (CMA) also reveals that Saudi Arabia’s unlisted sukuk and debt capital market has grown by approximately SAR33 billion since 2019, reaching SAR105 billion in 2023, compared to SAR72 billion in 2019.
Meanwhile, the size of Saudi Arabia’s corporate sukuk and debt capital market reached SAR125 billion by the end of 2023, compared to SAR95 billion by the end of 2019. Moreover, the number of companies issuing debt instruments has grown three-fold by the end of 2023 compared to the end of 2019.
Liquidity grows
Saudi Arabia’s sukuk and debt capital market saw a surge in liquidity with a traded value of SAR2.5 billion in 2023 compared to SAR0.8 billion in 2019, marking a record number of executed transactions.
In addition, the share of individual investors in the market increased from about 1 percent in 2021 to almost 12.5 percent by the end of 2023. CMA attributes this growth to the successful completion of a public offering of Sukuk in Q4 of 2022, which attracted over 125,000 individual investors. Meanwhile, the share of banks declined from 60 percent in 2021 to 48 percent at the end of 2023. The share of government entities also dropped from 20 percent to 13 percent during the same period.
“The number of executed transactions in the sukuk and debt capital market, both listed and unlisted, rose to 36,961 in 2023, compared to 3,722 in 2021, an increase of 893 percent,” revealed Fahad Mohammed bin Hamdan, CMA’s deputy assistant of financing and investment.
Read: Saudi Arabia’s PIF successfully prices inaugural $831 million sterling-denominated bonds
Most active sectors
The most active sectors in Saudi Arabia’s sukuk and debt capital market by the end of 2023 include the financial sector, which emerged as the most active sector in using the sukuk and debt capital market as a financing channel. Following closely came the energy sector and the public utilities sector.
Saudi Arabia’s CMA aims to further develop the corporate sukuk and debt capital market in collaboration with the members of the Sukuk and Debt Instruments Market Development Committee and stakeholders.
Hence, it will implement a portfolio of initiatives, including 16 strategic initiatives that aim to enhance the Kingdom’s attractiveness and efficiency in the market. Moreover, the initiatives seek to boost the country’s regional and international competitiveness by developing the legislative environment, incentives and infrastructure to encourage issuers to issue sukuk and bonds locally. In addition, the authority will focus on enhancing the trade of this capital and encourage investor participation.
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