The value of sukuk deals in the Saudi market skyrocketed by a massive 320 per cent to a total of SAR452 million since the beginning of the current year until September 15.
During the same period last year, the value of sukuk deals stood only at SAR107.1m, according to a report by Al Eqtisadiah. During the one-month period from August 15 to September 15 this year, two deals worth SAR118.5m were struck.
The value of sukuk and bonds in the Saudi capital markets now stands at roughly SAR6 billion. In terms of numbers, five sukuk deals have been concluded since the beginning of the current year.
The growing activity in the Saudi sukuk and bonds markets is in line with projections that the Gulf region will see more robust demand by the private and public sectors for bonds and Islamic finance instruments.
Sukuk and bonds are considered important financing channels used by governments, companies and institutions to secure the necessary liquidity to finance their projects at a relatively low cost.
Furthermore, sukuk and bonds provide a protection layer to investors’ portfolios and provide them with lower-risk investment tools.
At the beginning of this year, global rating agency Standard & Poor’s said it expects government spending in the GCC region to support the sukuk market to grow further.
It is noteworthy that sukuk issuances exceeded $24bn last year in the Gulf region, according to data from Bloomberg.
(SAR1 = AED0.98, at the time of publishing)