The Saudi Stock Exchange (Tadawul) has partnered with IHS Markit for the launch of an index tracking the performance of Arabic government bonds named Sukuks.
A Sukuk is similar to a western government bond but complies with Islamic Sharia laws.
The iBoxx Tadawul SAR Government Sukuk index, denominated in the local currency riyal, is the first of a series of benchmarks comprised of Saudi government Sukuks from IHS Markit and Tadawul.
The series of indices incorporates the Tadawul’s market data with the bond pricing and indexing expertise of IHS Markit.
Offering a broad exposure to the Saudi government Sukuk market, the minimum outstanding value of the underlying bonds must be greater than SAR 100m.
According to Sophia Dancygier, head of indices at IHS Markit, the launch is a result of both companies’ bid to develop and improve the transparency of the Saudi capital market and serve the investment needs of financial institutions both domestic and international.
Khalid Al Hussan, CEO of Tadawul, said in a statement: “As we continue to emerge as a vibrant market, our fixed income securities require similar tools that can support riyal-denominated Sukuks and bonds.
“Working with IHS Markit creates an opportunity to jointly develop benchmarks and other data-driven services that facilitate access to the opportunities present in the Saudi markets.”
The index has been selected by Saudi ETF issuer Alinma Investment as the benchmark for an ETF which is set to list on the Saudi Stock Exchange.