Price Discovery for Sukuk Looks Impossible with Illiquid Secondary Market: Saudi Case Study

Back in early April 2018, Saudi Arabia’s securities regulator announced that it had approved the listing of local currency government sukuk and bonds on the Saudi Stock Exchange. By October 2018, the total size of listed of Riyal-denominated government debt stood at more than the equivalent of $66 billion in the local exchange. Keep in mind that the government has raised a total of $52 billion in international notes, both Islamic and conventional, since it started tapping the international debt markets in 2016 as part of its efforts to diversify its oil-reliant economy

Qualified and approved foreign investors would be able to purchase that debt at floating, fixed, bond, sukuk, as well as with different tenors. This will give emerging market debt investors access to this untapped l...