{"id":115142,"date":"2026-05-15T00:00:00","date_gmt":"2026-05-15T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/menaplus\/?p=115142"},"modified":"2026-05-15T05:56:21","modified_gmt":"2026-05-15T05:56:21","slug":"saudi-sukuk-are-going-from-a-local-asset-class-to-global-benchmarks","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/menaplus\/2026\/05\/15\/saudi-sukuk-are-going-from-a-local-asset-class-to-global-benchmarks\/","title":{"rendered":"Saudi sukuk are going from a local asset class to global benchmarks"},"content":{"rendered":"

Saudi<\/strong> Arabia\u2019s SAR-denominated government sukuk are graduating to global benchmark <\/strong>status, marking a structural shift in how global money relates to Saudi paper.<\/strong> The admission of the sukuk to JPMorgan\u2019s Government Bond Index for Emerging Markets (GBI-EM) and Bloomberg\u2019s EM Local Currency Government Index in the first half of next year is expected to draw in over USD 10 bn in foreign inflows, potentially lowering borrowing costs for the state in the process. <\/p>\n

Saudi government debt joining the indexes means that it is \u201cno longer optional for global <\/strong>investors.<\/strong> It\u2019s now part of the standard benchmark,\u201d senior investment banker Mustafa Fahim tells EnterpriseAM. \u201cIt brings in a much more diverse group of buyers, which helps lower the cost of borrowing for everyone.\u201d<\/p>\n

How realistic is that USD 10 bn figure?<\/strong> It\u2019s \u201cvery realistic,\u201d Fahim says, pointing to the sukuk being weighted at 2.52% in GBI-EM. Passive funds will be near-automatic buyers, but the bigger prize is active managers overweighting Saudi paper, which depends on yields outpacing US returns \u2014 a growing likelihood as global rates ease \u2014 and continued trading-infrastructure upgrades. <\/p>\n

The headline number \u201ccan be attracted within the first couple of years<\/strong> subject to normal market conditions,\u201d Nizwa Bank\u2019s Treasury and Global Markets head Muhammad Ihsan tells EnterpriseAM.<\/p>\n

The plumbing is ready:<\/strong> The inclusion follows a multi-year overhaul of trading and settlement infrastructure, including the expansion of a primary dealers program to include international banks, an over-the-counter settlement framework introduced in mid-2025, and stronger links with international central securities depositories.<\/p>\n

Will regional noise weigh on sentiment?<\/strong> \u201cSaudi Arabia is viewed as a safe bet within emerging markets,\u201d Fahim tells us, with the index inclusion itself providing a structural buffer against global risk-off episodes. Ihsan is more measured, noting that any emerging market is exposed to inflows being \u201cnegatively affected\u201d in a global risk-off, but a strong domestic investor base limits the damage. <\/p>\n

A stronger starting line:<\/strong> The Kingdom enters with a higher credit rating than most index peers and a USD peg that removes currency risk, Fahim notes. Ihsan, meanwhile, sees a path to becoming a heavyweight in the EM local currency universe, but it could take a few years. \u201cThe Saudi market could easily become comparable to EM giants like Mexico or Malaysia, with foreign investors reaching well above one-third of the local market size,\u201d he says.<\/p>\n

The remaining gap: corporate issuance. <\/strong>\u201cThe biggest challenge is that most of the market is still government bonds,\u201d Fahim says. Attracting long-term international players will need more debt issuances from private companies. \u201cWe need a wider variety of options beyond just government projects so that investors can spread their risk across different sectors of the economy,\u201d he adds.<\/p>\n

The index inclusion itself as part of the fix<\/strong>, Ihsan argues, as it \u201cdrives foreign demand while local currency markets attract interest,\u201d helping market breadth and encouraging more issuers to tap the local currency market.<\/p>\n","protected":false},"excerpt":{"rendered":"

Even as regional tensions could spur risk-off sentiments for emerging markets, Saudi Arabia is seen as a safe bet \u2014 and its index inclusion shores up that status<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2649],"tags":[2647,2538,2648,2563],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-115142","post","type-post","status-publish","format-standard","hentry","category-market-watch","tag-debt-watch","tag-enterpriseam","tag-market-watch","tag-saudi-arabia","wpautop","entry"],"acf":{"mongo_id":"99178519-cf1f-4634-94bf-96d74c0f3caf","order":"5","is_powered_by":false,"story_type":"1","photo_url":"http:\/\/ent.news\/2025\/9\/1711.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Graduation day","related_issue":[115133],"teaser":"Even as regional tensions could spur risk-off sentiments for emerging markets, Saudi Arabia is seen as a safe bet \u2014 and its index inclusion shores up that status"},"yoast_head":"\nSaudi sukuk are going from a local asset class to global benchmarks - 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