CMA approves incentive to prioritize credit-rated debt instruments

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The Capital Market Authority (CMA) approved a new incentive for public offerings of debt instruments. It prioritizes the review of public offering applications to issuers or issuances that have obtained a credit rating from a CMA-licensed credit rating agency.

This measure will remain in effect until the end of 2026.

The move aims to boost efficiency and transparency in the debt market, strengthen its role in business financing and growth, and encourage rated issuers to widen investor participation and deepen the market, the authority stated in a statement.

The initiative supports the CMA’s broader strategy to enhance the efficiency and transparency of the debt instruments market and support its role as a primary source of business financing and economic growth. It aligns with Vision 2030 goals to diversify funding sources and boost financial sustainability.

The CMA stressed that credit ratings are more than creditworthiness indicators, they are essential tools for enabling investors to make informed decisions based on clearer risk assessments.

By fast-tracking rated offerings, the CMA aims to develop a more stable and mature debt market, broaden the investor base, strengthen market confidence, and support better risk assessment of listed instruments.

The CMA expects the move to ease corporate access to debt markets, boost issuance volume, and enhance offering appeal, noting that credit ratings help financial advisors market deals, particularly to institutional and qualified investors.

Credit ratings provide forward-looking assessments of credit risk, indicating default likelihood and potential creditor losses. Issuers use them to demonstrate credit strength and attract investors, while investors rely on them for credit analysis and debt evaluation.