Moody’s expects major market participants to develop the market for riyal-denominated government sukuk in Saudi Arabia, which will have an impact on the Kingdom’s debt markets.

Moody’s said it expects primary dealers in newly issued sukuk to help the Saudi government build stable demand for sukuk securities, as well as foster a broader and more diversified investor base.

It added that this will help facilitate investors“ access to Saudi sovereign debt instruments.

On July 26, the Public Debt Management Office at the Ministry of Finance announced the launch of the first issuance through the primary dealer program for the distribution of sukuk under the ”Saudi Arabian Government Sukuk Program in Saudi Riyals.“

The Ministry of Finance stated that the issuance was conducted in accordance with global best practices via an electronic auction platform, enabling more than 20 investors from financial institutions and asset managers from various entities to participate and submit subscription requests on their own behalf and on behalf of their clients.

The report noted that five financial institutions were appointed as primary dealers for the issuance: Al-Ahli Commercial Bank, Saudi British Bank, Al-Jazira Bank, Samba Financial Group, and Al-Inmaa Bank.

It added that, under the agreement, the lead managers will purchase the sukuk being sold in a direct auction from the government and then place these securities on the secondary market for end investors.

The report noted that the latest sukuk issuance amounted to approximately 5.3 billion riyals, equivalent to $925 million, noting that this is a positive development for the Islamic debt markets in Saudi Arabia, as it will contribute to broadening the investor base and supporting market liquidity.