Saudi Arabia sets up domestic sukuk program

Saudi Arabia has completed establishing a riyal-denominated sukuk program, the finance ministry said in a statement on Sunday.

The program has been submitted to the Capital Market Authority (CMA), the Kingdom's market regulator.

Under the program, which was described as “unlimited”, the bonds will be offered in several issues. Details on the size, the expected profit rates and investor eligibility would be announced on a case-by-case basis by the ministry, it added.

The sukuk program comes as a part of the Debt Management Office’s objective of securing the Kingdom's financing at the best possible cost.

The ministry said last week that 13 domestic banks had qualified to participate in the sukuk issues.

Finance minister Mohammed Al-Jadaan told Al Arabiya television earlier this month that local currency sukuk issues, designed to help Riyadh cover a large budget deficit caused by low oil prices, would begin this month.

In 2015, Saudi Arabia issued local currency bonds to cover budget deficit amid a slump in oil prices, however, it suspended them late in 2016 due to strained liquidity in the banking system.