Debt market value in Saudi Arabia doubles since 2019

RIYADH: The Saudi debt market has experienced remarkable growth in recent years, underscoring the dynamic shifts occurring within the Kingdom’s financial landscape.

Mohammed Al-Quwaiz, the chairman of the Capital Market Authority (CMA) and the Financial Academy’s Board of Trustees, recently highlighted the market’s development, noting that its value has doubled to SR800 billion since 2019.

The substantial increase is emblematic of the broader economic transformations envisioned under Saudi Vision 2030, marking a strategic pivot toward enhancing the Kingdom’s financial services sector.

Despite this impressive growth, Al-Quwaiz elucidated that the debt market still represents less than 20 percent of the Saudi economy, indicating significant potential for further expansion.

The underutilisation presents numerous opportunities for investors, particularly as the Kingdom seeks to diversify its economic base and attract foreign investment.

Diversification of participants

Historically, Saudi banks have dominated the debt market, but recent trends show a diversification of participants, with a growing number of funds, insurance companies, and specialised entities now engaging in this vital segment of the economy.

The diversification is crucial for increasing market efficiency and resilience, as it brings varied perspectives and expertise into the fold.

The Debt Markets and Derivatives Forum 2024 (DMDF 2024), inaugurated by Al-Quwaiz in Riyadh, serves as an important platform for addressing emerging trends and encouraging further investment in the debt market.

The forum, organised by the Financial Academy under the leadership of Executive Director Mana Al-Khamsan, is designed to facilitate discussions among financial market experts and decision-makers. The agenda focuses on critical areas such as opportunities in the bond and Sukuk markets, as well as the examination of financial derivatives.

These discussions are particularly pertinent given the evolving nature of financial markets, driven by regulatory changes and an increasing appetite for innovative financial instruments.

Attractive financial ecosystem

Adding to its significance, DMDF 2024 boasts extensive partnerships with recognisable entities like the Saudi Tadawul Group, the Chicago Stock Exchange, and the International Capital Market Association (ICMA). Such collaborations not only enhance the forum’s credibility but also foster a global perspective on local market dynamics.

The melding of international expertise with local knowledge is fundamental to promoting a more robust and attractive financial ecosystem within Saudi Arabia.

A noteworthy feature of the forum is the introduction of a new professional certification program in partnership with ICMA, titled “Introduction to the Saudi Financial Market.”

The initiative is strategically aimed at equipping professionals with a deeper understanding of the complexities of Saudi financial markets, thereby preparing them for emerging developments. The investment in education and training through the Financial Academy emphasizes a long-term commitment to enhancing the capabilities of the workforce, which is essential for sustaining growth and innovation in the sector.

Furthermore, the continued emphasis on the debt and derivatives markets is noteworthy, particularly in light of recent regulatory and legal reforms designed to enhance market integrity and attractiveness.

By positioning these markets as vital components of the overall financial infrastructure, Saudi Arabia demonstrates a commitment to not only diversify its economy but to also establish a leading regional financial hub.