Saudi Arabian authorities announced that they would trade local currency government bonds on the Saudi Stock Exchange from April 8, in an effort to stimulate secondary marketing trading of debt and strengthen state finances.
The Capital Market Authority said that over SAR204.4 billion riyals ($54.4 billion) would be available to trade with five, seven and ten year maturities, including fixed- and floating- bonds and Islamic instruments.
“The listing of government debt instruments on Tadawul is a key pillar of the Saudi government’s strategy to make the kingdom a global investment powerhouse,” said Fahad al-Saif, president of the Saudi Debt Management Office.
The exchange-base method of trading for government debts has been implemented in hopes of expanding ownership from just banks to insurers, mutual funds and individual investors, this way the government can finance their budget deficit easier.
Saudi companies have a high reliance on bank lending, by international standards, therefore by trading instead it could encourage companies to issue corporate bonds.