Saudi Arabia set to launch new bond market

Saudi Arabia is poised to launch a Sukuk and bond market this week, a step analysts said reflected the OPEC kingpin’s push to further develop its debt market at a time when the global meltdown is drying up credit and restricting liquidity.

The new market’s launch on June 13 comes as Saudi Arabia, home to the world’s largest proven reserves of crude oil and the Arab world’s largest economy, forges ahead with a slew of infrastructure projects that officials say will cost about US$400 billion (Dh1.47 trillion) over the next five years.

It also marks a broader push within the Gulf Arab region to try to encourage a shift away from bank lending and the development of a new debt market. “If there is anything that they’re realising, it’s that the size of the projects are burdening the banks and one cannot expect, going forward, that the banks will be able to shoulder the burden,” said John Sfakianakis, chief economist with SABB, the HSBC affiliate formerly known as Saudi British Bank.