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Riyadh - Saudi Arabia's Capital Market Authority announced on Saturday that it will set up a market for debt issues to further develop the kingdom's capital markets.
The stock market regulator said it would permit the formal issuance, trading, clearance and registration on the Tadawul exchange, which currently lists two debt issues traded over-the-counter.
It said Tadawul would be responsible for the details of setting up the market and when it would be ready for launch. No target date was given.
Industry officials cheered the measure, saying it would deepen the oil-rich kingdom's capital markets, especially in sukuk debt - instruments compliant with Islamic sharia rules.
"The potential for debt instruments including sukuk is high now that the cost of financing has risen due to the crisis," said Ihsan Ali Bu-Hulaiga, chairperson of Saudi investment bank Watan Investment.
"It is the begining of a new era ... There are companies waiting for this, waiting to break away from banks," he said.
Bu-Hulaiga said there is appetite from buyers who he expects will benefit more from sukuk bonds than the few other existing choices for savings.
"Sukuk bonds will allow savers to earn more," he said.
- AFP
