Saudi Arabia’s domestic debt market has reached a significant milestone with J.P. Morgan and Bloomberg Index Services Limited announcing the inclusion of riyal-denominated government sukuk in their primary emerging market indices. Finance Minister Mohammed Aljadaan noted that this development signals robust international confidence in the Kingdom’s financial reforms and economic stability. The inclusion will be phased in, with J.P. Morgan’s GBI-EM index adding the sukuk starting in early 2027 with an estimated 2.52% weight, while Bloomberg plans to integrate the instruments into its local currency index during its April 2027 rebalancing.
This move is a direct result of the Financial Sector Development Program, a central component of Saudi Vision 2030 intended to diversify the investor base and increase the efficiency of government funding. By joining these prestigious global benchmarks, Saudi debt is expected to see higher demand from international portfolio managers, which should lead to better liquidity in the secondary market and a more competitive domestic environment. J.P. Morgan estimates that eight specific sukuk issuances, valued at approximately $69 billion, will be eligible for inclusion.
The transition to these indices has been supported by several critical infrastructure upgrades within the Saudi financial system. Recent reforms include opening the Primary Dealers Program to global banks, refining settlement processes for foreign entities, and establishing better links with international depositories like Euroclear. These technical improvements, alongside the launch of a new over-the-counter settlement framework in 2025, have paved the way for the Kingdom’s deeper integration into the global capital markets.
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