Saudi Finance Minister, Mohammed Al-Jadaan, announced the inclusion of government sukuk denominated in riyals in the 'J.P. Morgan' and 'Bloomberg' indices, which reflects the strength of the Saudi economy and enhances its position in global financial markets. The sukuk will be included in the Emerging Markets Government Bond Index (GBI-EM) starting January 2027, with an expected weight of 2.52%.
Al-Jadaan also indicated that the inclusion of Saudi sukuk in the Bloomberg Local Currency Government Bond Index for emerging markets will officially begin at the end of April 2027. This dual membership is a strategic step that enhances the Kingdom's role as a key player in international financial markets.
Event Details
Al-Jadaan confirmed that this achievement is the result of the continuous support from the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, and the diligent follow-up from Crown Prince Mohammed bin Salman. He explained that the inclusion serves as tangible evidence of the success of the targets set by Saudi Vision 2030 and the Financial Sector Development Program in deepening the financial market and expanding the investor base.
He noted that the Kingdom is on a comprehensive reform path that raises levels of transparency and liquidity, and develops the regulatory framework in line with the highest global standards. These steps enhance the Kingdom's attractiveness as a safe and reliable investment destination.
Background & Context
These developments come as part of the Kingdom's efforts to enhance its position in global financial markets, where sukuk represent important financial instruments that contribute to attracting foreign investments. The J.P. Morgan inclusion is expected to cover eight issuances of government sukuk with a nominal value of nearly $69 billion.
Bloomberg has identified the eligible securities as fixed-income sukuk with a maturity of no less than one year and a minimum outstanding amount of 1 billion riyals. These steps come at a time when global financial markets are experiencing significant changes.
Impact & Consequences
The inclusion of riyal-denominated sukuk is expected to enhance the international competitiveness of the local debt market and increase the presence of Saudi sovereign instruments within major investment portfolios worldwide. This inclusion will bolster liquidity in the secondary market, solidifying the role of the Saudi financial market as one of the leading markets in the region.
It will also facilitate the flow of foreign capital towards local financial instruments, reflecting the growing confidence in the Saudi economy. This inclusion is considered an important step towards achieving the goals of Saudi Vision 2030.
Regional Significance
The inclusion of Saudi sukuk in global indices represents a positive step that reflects the strength of the Saudi economy and may have positive effects on other Arab countries seeking to enhance their financial markets. This move could encourage other countries to improve their investment environments.
In conclusion, the inclusion of Saudi sukuk in global indices reflects the Kingdom's commitment to enhancing its position in financial markets and boosts investment opportunities in the region, contributing to sustainable economic development.