Riyadh- The Debt Management Office (DMO) announced on Sunday the establishment of the local currency Islamic bonds program, after banks fulfilled requirements that qualify them to participate.
Saudi Arabia’s ministry of finance – acting through the Debt Management Office – said it had established a program to issue local currency Islamic bonds, without determining the value or duration. The ministry would issue sukuks from time to time to investors.
Terms and conditions of each issuance will be specified including, but not limited to, the types of eligible investors, the size of the issuance and the expected return.
The establishment of the sukuk program comes as part of the Debt Management Office’s role in securing the Kingdom of Saudi Arabia’s financing needs with best financing costs. The Program will also contribute to the fulfillment of the objectives of the Fiscal Balance Program and to the development of the Saudi Sukuk market.
These developments coincide with the kingdom taking strides towards efficient spending and regulating public debt.
The DMO said last week that 13 domestic banks had qualified to participate in its domestic sukuk issues. The banks are: Alinma Bank, National Commercial Bank, Saudi Hollandi Bank, Al Bilad Bank, Bank AlJazira, Gulf International Bank B.S.C., Al-Rajhi Bank, Riyad Bank, Saudi British Bank, Banque Saudi Fransi, Saudi Investment Bank, Arab National Bank and Samba Financial Group.
Saudi Arabia currently relies on a financial strength and huge foreign reserves and has also conserved its credit rating from several international ratings.