FTSE Russell launches local currency Saudi government bond index

Aug 28th, 2020 | By | Category: Fixed Income

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FTSE Russell has unveiled a new government bond index providing exposure to local currency debt issued by Saudi Arabia.

Saudi Arabia ETFs

The index provides exposure to riyal-denominated Saudi Arabian government debt.

The FTSE Saudi Arabian Government Bond Index provides international investors with transparency into the performance and risk characteristics of the Persian Gulf nation’s riyal-denominated sovereign bond market.

The index is available to serve as a benchmark for active managers or as the reference for investment products such as passively managed ETFs.

The index measures the performance of fixed-rate Saudi Arabian government bonds including sukuk (Shariah-compliant) and non-sukuk varieties. Eligible issues must have at least one year remaining to maturity and a minimum amount outstanding of SAR 1 billion.

As of 31 July, 45 securities with a total market value of SAR 273bn ($73bn) were eligible for inclusion in the index.

FTSE Russell will assess whether Saudi Arabia will be added to its headline FTSE Emerging Markets Government Bond Index during the next country classification review scheduled for September. Inclusion will depend on whether the Saudi Arabian bond market is considered sufficiently accessible for foreign investors.

FTSE Russell promoted Saudi Arabia’s equity market to emerging market status in March 2018.

Nikki Stefanelli, Global Head of Fixed Income and Multi-Asset Index Policy, FTSE Russell, commented, “We are pleased to offer a dedicated index for local currency Saudi Arabian sovereign debt as part of our commitment to global government bond market tracking.

“The Saudi Arabian bond market will be considered for inclusion in global fixed income benchmarks through our Fixed Income Country Classification process which has been successful in identifying transparent and objective metrics for accessibility for international investors”.

Scott Harman, Global Head of Fixed Income and Multi-Asset Index Product Management, FTSE Russell, added, “This index launch reflects our commitment to expanding the emerging market debt investment choice-set, in both US dollar and local currencies, and providing solutions to access the rapidly growing debt markets in the Gulf Cooperation Council region.”

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