Saudi launches primary dealer scheme with sukuk issue

Saudi Arabia’s Debt Management Office has begun selling local currency government bonds through a new “primary dealer” scheme, which is aimed at increasing demand for the debt and widening the range of investors holding it, the Ministry of Finance said on Wednesday.

The issuance took place via an electronic auction platform that allowed more than 20 investors from participating financial institutions and asset managers to submit bids.

Five local banks — Alinma Bank, Bank Aljazira , Samba Financial Group, National Commercial Bank and Saudi British Bank — for the first time acted as primary dealers, buying the sukuk directly from the government and then immediately making a market in them by quoting two-way prices to other investors.

“Market-making will play an active role in stimulating the financial markets as a whole and significantly increasing the liquidity in the secondary market,” the ministry said.

Saudi Arabia has a strategic goal of supporting and developing advanced financial markets in the Kingdom via the integration of both the public and private sectors as part of its goals under Vision 2030.