Fitch says Saudi Arabia's debt market to hit $500B in 3 years

Bashar Al-Natoor, Global Head of Islamic Finance at Fitch Ratings

In an interview with Argaam on the sidelines of the Arab Federation of Capital Markets conference, Al-Natoor expected that the size of the debt market in the Kingdom would reach about $500 billion within two to three years.

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He went on to say that there are serious plans from the Saudi government and its related sectors to develop the debt market and diversify funding sources away from relying mainly on oil revenues.

The issuance of government bonds is greatly encouraged, not only to expand investor base but also to help individuals save and achieve investment returns through purchasing government financial instruments, he added.

Fitch studied a number of sukuk and bonds with similar characteristics and risks to compare their returns and performance, Al-Natoor explained. The study found that there was a strong correlation between them in most periods, and the spread in return margins of sukuk and bonds were not significantly different.

As for the impact of lower interest rates on the debt market, he believes that the expected interest rate cut by the US Federal Reserve could push the pace of issuances.

Al-Natoor also stressed the importance of the Kingdom's ongoing efforts to strengthen its legislative and regulatory framework to attract more investments and support the development of the debt market.