Global index provider FTSE Russell launched a bond index for Saudi Arabia to measure the performance of fixed-rate, local currency government bonds, according to reports and a statement from the FTSE.
The addition could lead to new inflows to the Saudi market, a goal of Saudi Arabia’s Vision 2030 economic and social reform plans.
The FTSE Saudi Arabian Government Bond Index “offers coverage of sukuk and non-sukuk government bonds with at least one year to maturity and a minimum amount outstanding of SAR 1 billion. As of July 31, 2020, 45 securities with a total market value of SAR 273.2 billion (USD 72.9 billion) were eligible for inclusion in the index. Pricing is sourced from Refinitiv and performance history is available from February 2020,” the FTSE said.
The Saudi Arabian government bond market will be “assessed as part of FTSE Russell’s Fixed Income Country Classification process, which will commence its next annual review in September 2020. The FTSE Russell Fixed Income Country Classification Framework was introduced in early 2019 to enhance the transparency of the process used to manage benchmark inclusion. It assigns a Market Accessibility Level of 0, 1 or 2, with 2 representing the highest level of accessibility for foreign investors. A minimum of 1 is required for the FTSE Emerging Markets Government Bond Index (EMGBI), which currently includes bonds from 16 countries and provides a broad metric for currency EM government markets,” according to the FTSE statement.
“We are pleased to offer a dedicated index for local currency Saudi Arabian sovereign debt as part of our commitment to global government bond market tracking,” Nikki Stefanelli, Global Head of Fixed Income and Multi-Asset Index Policy, FTSE Russell, said. “The Saudi Arabian bond market will be considered for inclusion in global fixed income benchmarks through our Fixed Income Country Classification process, which has been successful in identifying transparent and objective metrics for accessibility for international investors.”
According to Reuters, Saudi Arabia first began offering local currency bonds in monthly auctions in 2015 and it launched monthly sukuk issues in mid-2017.
