The dollar debt instruments of the Saudi government and local companies ended last year with capital gains, which pushed them to outperform the emerging market bond index of the sovereign and non-sovereign categories.
This superiority came despite the sharp fluctuations experienced by the global fixed income market due to the effects of US Treasury bond yields and the move by central banks towards withdrawing stimulus packages.
And the number of debt instruments In the international indices, divided between the Kingdom’s government and local companies, 62 instruments of bonds and sukuk, all of which are traded on global stock exchanges.
The market value at the end of last year of sovereign and non-sovereign debt instruments, listed on global stock exchanges, amounted to 131.41 billion dollars, compared to their nominal value of 119.67 billion dollars, according to “Al-Iqtisadiah” newspaper.
Those debt instruments added $11.73 billion to their nominal value for the same period.
The preference of Saudi companies for maturities between five and seven years contributed to making the average rate of periodic distributions for 39 financial instruments of bonds and sukuk become 3.58%, compared to 3.82%, for the sovereign debt instruments of Saudi Arabia, which are characterized by their long maturity, which attracts with it higher yield.
According to official statements, the financial circles are anticipating during the first quarter of this year green bonds or green sukuk for the Saudi government.
International investors interacted with the Saudi budget data, which boosted the performance of the debt index that tracks its performance.
The “iBooks Index of Saudi Sovereign Dollar Issues” gained 1.33%, compared to losses of 1.24%, for its counterpart in the emerging market bond index due to the rise in US Treasury yields.
The recovery in oil prices during the past year contributed to providing the necessary support for debt instruments issued by Saudi exporters, which enabled them to achieve better performance in global markets, after the shock of fluctuations in US Treasury bond yields.
These indicators give investors optimism that Saudi debt instruments will deal better with the repercussions of the Federal Reserve’s decision to reduce the asset purchase program and then start raising interest rates.
On the other hand, the “Market iBooks” index of non-sovereign dollar issues of Saudi Arabia achieved gains of 0.92%, by the end of 2021, compared to losses of 1.85%, for its counterpart in the non-sovereign bond index of emerging markets.
During the monetary tightening phase for this year, investors are expected to maintain their exposure to Saudi debt instruments, due to their periodic distributions, which average, according to bond indices, between 3.82% and 3.58%.
According to a report by “Bloomberg”, the performance of emerging market bonds in 2021 remains much better compared to the period of the so-called tantrum in 2013, when the “Federal Reserve” hinted at the time to reduce asset purchases, which resulted in a 3.8% decline in emerging market bonds over the year.
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