Saudi sukuk and bonds jump by 5.7 percent this year

Canceling commissions for trading sukuks and bonds contributes to market growth
Saudi sukuk and bonds jump by 5.7 percent this year
Total volume of sukuks increased from SAR511.25 billion to SR534.72 this year

The total volume of sukuks and bonds in Saudi Arabia increased by 5.73 percent during the third quarter of this year. This amounts to about SAR752.76 billion, compared to SAR711.94 billion at the end of the same quarter in 2022.

The listed sukuks and bonds accounted for the largest share of the total, equivalent to 71.03 percent.

Volume of bonds increase

The total volume of listed sukuk and bonds increased by 4.59 percent. The total went up from SAR511.25 billion in last year’s third quarter to SR534.72 billion in this year’s third quarter.

Meanwhile, the total volume of unlisted sukuk and bonds increased to SAR218.04 billion by the end of this year’s third quarter. That is compared to about SAR200.69 billion at the end of last year’s third quarter. This makes up an increase of 8.65 percent.

The volume of sukuks and bonds relative to gross domestic product reached 19.06 percent in the third quarter of 2023. That is compared to about 19.97 percent in the same quarter of 2022.

The Corporate Sukuk and Bonds Index rose 0.33 percent to 996.88 points. On the other hand, the Government Sukuks and Bonds Index declined 4.27 percent to 924.87 points. Meanwhile, the Sukuks and Bonds Market Index declined by 4.23 percent to 916.89 points.

What are sukuks and bonds?

Sukuk and Bonds are financial instruments issued by Governments or Corporations to raise money from investors for a period of time.

Commonly, over this period, Sukuk and bonds distribute periodic coupon payments (either at a fixed or floating rate). At the end of this period, known as maturity, issuers pay back the money raised from investors, known as the principal.

Read: Middle East Economy: Top reasons the GCC is an economic powerhouse

Lowering prices

Recently, the sukuk and bonds market has witnessed multiple changes and developments. One of the most important changes was reducing the nominal value of government bonds from SAR1 million to SAR1,000. That was in order to increase their rate of trading in the market. An international link has also been established between the Securities Depository Center Company and ClearStream. Additionally, such debt instruments were made available to all foreign investors.

This year, the Capital Market Authority canceled commissions for trading sukuks and bonds starting May 2023. The aim was to reduce costs for market traders. This decision is an extension of the exemptions and changes witnessed for trading debt instruments during the last 14 years.

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