Moody's assigns (P)A1/Aaa.sa rating to Saudi Arabia's domestic Sukuk issuance program.
His Excellency the Minister of Finance, Acting Minister of Economy and Planning, and the Head of the Financial Sector Development Program, Mr. Mohammed Al-Jadaan, emphasized that this rating reflects the strength, flexibility and capability of the Kingdom's economy in facing global economic challenges. It also reflects the effectiveness of structural reforms and financial and economic policies aimed at enhancing, diversifying and sustaining economic growth to achieve comprehensive economic and social development. These positive estimates from credit rating agencies confirm the great confidence in the Saudi economy, the strength of the Kingdom's financial status and its ability to continue growth and face challenges, especially in light of the difficult crises and exceptional circumstances the world is currently witnessing. His Excellency indicates that the Saudi government will continue to deliver the objectives of Vision 2030 by enabling the financial sector in the Kingdom to be among the largest financial centers in the world by 2030, despite the challenges the global economy faces in fighting the impact of Covid-19.
The Chief Executive Officer of the National Debt Management Center, Mr. Fahad Al-Saif, expressed his support to the rating of the Saudi issuances denominated in Saudi Riyal at the highest grade of investment grade (Aaa.sa) on the national scale, that reflects the depth of the local debt market by providing a risk-free yield curve, and confirms the high creditworthiness of the Sovereign local issuances with the growing appetite of investors and private sector to the Saudi local issuances, especially in light of the financial and economic conditions that the world is currently witnessing due to the Coronavirus (Covid-19) pandemic.
Al-Saif explained that the credit rating of local issuances is a guiding reference for potential issuers from the public and private sectors in Saudi Arabia. From a wider fiduciary point of view; this contributes to enhancing transparency within the local debt markets. The national scale rating also contributes to achieving the objectives of the Financial Sector Development Program in deepening the market and developing local debt markets. Pointing out that the local issuances rating reflects the objectives of the Ministry of Finance and efforts of the National Debt Management Center in issuing debt instruments in the local and international markets and prove the strength and durability of the Saudi economy through historical coverage of issuances. The introduction of the national scale rating is expected to further attract foreign investors in the local debt capital market.
It is noteworthy that the credit rating reports for domestic issuances are opinions on the creditworthiness of public and private issuers, and financial obligations related to other issuers within a country. The credit rating of domestic issuances deals with the relative risk within a country (relative to the Sovereign issuance rating), while the credit rating of international issuances is based on a cross-country comparison.
The credit rating agency “Moody's" previously confirmed in a report on 09/29/2020 that the Saudi government had succeeded over the past three years in developing a domestic sukuk market "from scratch" to become "deep", and that it was "working increasingly well." This allowed it to benefit from the growing domestic and international demand for fixed income assets that are Sharia compliant.