The Need for Sovereign Guarantees to Spur Growth in Debt Capital Markets

One of the pillars of within Islamic and conventional debt capital markets’ ecosystem is insurance and guarantee related products. Setting up an Islamic guarantee for debt instrument can become a catalyst to stimulate growth as well as enabling corporates to access the market at better borrowing rates. To make economic sense, such entity should be rated “AAA” in order to make a difference in uplifting the credit rating of the potential issuer (subject to 100% guarantee as well as compliance with Sharia guidelines of third party guarantee).

Saudi is taking the lead in GCC

With exception of few (including Malaysia), many countries lack such initiatives that lead to lowering the cost of borrowing on issuers. But things are changing in the...