Saudi bond trading hits SR21 billion on first day

14/06/2009 00:00 AST

The first day of Saudi Arabian bond trading on Saturday reached SR21 billion, including SR16 billion bonds by Saudi Arabian Basic Industries Corporation (SABIC) and SR5 billion by Saudi Electricity Company (SEC).

SEC, the Gulf’s largest utility by market value, on Saturday began a roadshow for its second Islamic bond issue which bankers expect will raise up to SR7 billion ($1.87 billion). Bourse regulator Capital Market Authority (CMA) said last week it had approved the issuance of the Sukuk on June 13-28.

More than 50 global investors showed interest in directly investing in listed Saudi Arabian equities at the London Stock Exchange’s first Saudi Arabia Capital Markets Day held on Friday.

CMA organized the event in London aimed at inviting foreign investors to take advantage of an expected deluge of bond and Sukuk issues.

Analysts said the move could form the nucleus of a Gulf bond market that will offset bank liquidity shortages and give public and private institutions a safe and less costly instrument to fund their budgets and development plans.

“Liquidity in Saudi Arabia is now available and we could benefit from foreign investment in this regard,” CMA Chairman Abdul Rahman Al-Tuwaijri told the seminar in London, co-sponsored by Hermes Financial Group.

“This seminar constitutes a great opportunity for foreign firms and other investors to participate in the new investment strategies in Saudi Arabia. We are presenting investors based in London with a good opportunity to get acquainted with the investment opportunities available in Saudi Arabia.”

“The establishment of a bond and Sukuk market in Saudi Arabia is a welcome strategic decision aimed at introducing new multi-purpose financial instruments with less risks. I think this will contribute to increasing capital flow into the Kingdom,” said Saudi stock broker Mohammed Al-Anqari.

“This market will also constitute a significant funding source for big projects that will be carried out by listed companies and other firms.”

Meanwhile, Saudi Arabia’s Tadawul All-Share Index gained 2.59 percent on Saturday, breaking through the 6,000-barrier again.

The TASI index closed at 6,094.91 points amid stabilizing high oil prices and slightly higher US exchanges.

The bank and financials services index (up 4.17 percent) in particular lifted the market with Alinma Bank (1.06 percent higher) trading most actively by volume.

“This move by Saudi Arabia is strategic and decisive in the current circumstances as it comes at a time when banks alone can no longer secure all the funds needed for the development process. This bond market is an important funding addition to banks,” said Ziad Dabbas, a financial analyst at the National Bank of Abu Dhabi.

Saudi Gazette