Saudi Arabia is seeing fresh debt trading activity after launching over-the-counter settlement for sovereign riyal bonds in an effort to develop the kingdom’s capital markets and draw more foreign investors.
About 2 billion riyals ($533 million) was traded over the counter in June, the first full month that the settlement option was available, according to data from exchange operator Saudi Tadawul Group.
OTC activity boosted total traded value in the market to 5.2 billion, compared with a monthly average of about 4.3 billion across the first five months of the year, the data showed. More than 80% of OTC trades included a foreign investor, Tadawul said.
Tadawul launched the OTC option in mid-May, seeking to further drive Crown Prince Mohammed bin Salman’s ambitions to develop more advanced financial markets. In the last year, it has stepped up efforts to lure high frequency trading firms and vowed to further promote IPO offerings. The Capital Market Authority has meanwhile said it’s considering easing tax rules on local corporate bonds.
The OTC move also comes as the Saudi government becomes a more active borrower, both at home and abroad.
Outside of the sovereign, corporate local currency bonds are gaining more attention after being included in certain emerging market bond indices over the past few years, according to a S&P Global report issued on Monday.
S&P highlighted those inclusions and a new investment law passed in 2024 as positive drivers for the domestic market, while noting that liquidity and foreign participation is still limited.
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