Saudi bonds hope to add liquidity

Saudi Arabia unveiled the latest in a series of innovations to its capital markets earlier this week when it opened a regulated bond and sukuk (Islamic bond) market. The move comes at an opportune time.

Many Saudi banks are at the limits of their credit capacity, with loan-to- deposit ratios exceeding the limit imposed by the central bank. Bank loans extended in 2008 equalled the total of the previous two years, according to Mohammad al-Jasser, the central bank governor.

In February, Mr Jasser urged commercial banks and companies seeking financing to tap the debt markets.