05.04.2013 - ‘Sleeping giant’ debt market awakes in Kingdom, says report
Saudi Arabia’s bond market is taking off as local companies rush to issue debt — though low returns are keeping foreign investors on the sidelines. Traditionally, Saudi companies and other entities have relied on bank loans and retained earnings to finance their expansion. For debt market traders, that has made the Arab world’s biggest economy a case of unfulfilled potential. In recent months, that pattern has started to change as companies become more familiar with bonds, a wide range of investors demand them, and banks bump up against the limits of how much they can lend to individual companies. This has caused a burst of riyal-denominated debt issuance. In Saudi Arabia, such issuance is entirely in the form of Islamic bonds, or sukuk, which are structured to obey Islam’s ban on interest and instead pay returns on assets...............................................Full Article: Source