RIYADH: Saudi Arabia’s sukuk and debt capital market has grown significantly since 2019, surpassing SR30 billion ($7.9 billion), according to the Kingdom’s Capital Market Authority. The regulatory body has announced that the market has witnessed an annual growth rate of 7.9 percent, with unlisted issuances showing a particularly robust yearly growth rate of 9.6 percent. The unlisted sukuk and debt capital market has expanded from SR72 billion in 2019 to approximately SR105 billion by the end of 2023. The total size of the corporate sukuk and debt capital market reached SR125 billion by the end of 2023, compared to SR95 billion at the end of 2019. “Additionally, the number of companies issuing debt instruments has tripled by the end of 2023 compared to the end of 2019,” CMA said. In the final quarter of 2023 alone, the Kingdom’s sukuk and bond issuances rose 2.8 percent in value year over year, reaching about SR758.8 billion. The growth was attributed to an increase in the listed sukuk and bonds issued by the government, which constituted 70 percent of the total, at SR529.8 billion. Sukuk are Shariah-compliant financial certificates through which investors gain partial ownership of an issuer’s assets until maturity. The authority, formed under the Financial Sector Development Program, has played a crucial role in these advancements through its Sukuk and Debt Instruments Market Development Committee. The committee, chaired by the chairman of the CMA, has launched multiple initiatives to enhance market liquidity and attract a diverse investor base. In terms of market activity, the value of trades and the number of transactions surged significantly. The traded value reached SR2.5 billion in 2023, up from SR0.8 billion in 2019, with the number of executed transactions increasing from 3,722 in 2021 to 36,961 in 2023. CMA’s Deputy Assistant of Financing and Investment, Fahad Mohammed bin Hamdan, highlighted the authority’s commitment to fostering a thriving sukuk and debt capital market. He pointed out the significant increase in individual investors’ participation, which rose from about 1 percent at the end of 2021 to approximately 12.5 percent by the end of 2023. This shift was propelled by a successful public offering of sukuk in the last quarter of 2022, attracting over 125,000 individual investors. Bin Hamdan added: “At the same time, the share of banks declined from roughly 60 percent at the end of 2021 to 48 percent at the end of 2023. The share of government entities also dropped by 7 percent, from 20 percent at the end of 2021 to 13 percent in 2023.” He explained that the share of investment funds increased from about 12 percent at the end of 2021 to 15 percent at the end of 2023. Regarding the number of executed transactions in the sukuk and debt capital market, both listed and unlisted, rose to 36,961 in 2023, compared to 3,722 in 2021, an increase of 893 percent. Sector-wise, by the end of 2023, the financial industry emerged as the most active issuer of sukuk and debt instruments, followed by the energy and public utilities sectors. Looking ahead, the CMA plans to continue developing the market through 16 strategic initiatives aimed at enhancing the legislative environment, incentives, and infrastructure to make the market more attractive to issuers and investors. Key measures include easing regulatory frameworks, introducing sustainable bonds, removing withholding tax requirements for local debt instrument issuances, and expanding the REPO framework to include debt capital market instruments. Bin Hamdan emphasized that these efforts are designed to boost the sukuk and debt capital market’s regional and international competitiveness, ultimately contributing to the broader economic growth and diversification goals of Saudi Arabia. Saudi Arabia is focused on advancing its capital market by encouraging the private sector’s involvement and attracting foreign institutional investors to support key projects in the country.