The value of listed bonds and bonds in Saudi Arabia increased to 372.7 billion riyals at the end of the first quarter of 2020, registering a growth of 24.3 percent, equivalent to 72.96 billion riyals, compared to its value at the end of the first quarter of 2019, amounting to 299.74 billion riyals.
On a quarterly basis, its value increased by 5.1 percent, equivalent to 18.2 billion riyals, compared to its value at the end of the previous year 2019, which amounted to about 354.5 billion riyals.
According to the monitoring unit of the reports in the "Economy" based on the data of the Capital Market Company "Tadawul" and the data of the Capital Market Authority, the value of listed bonds and bonds returns to 104 owners at the end of the first quarter 2020, compared to 99 owners at the end of 2019 and compared to 69 owners at the end of the first quarter 2019.
Ownership of listed bonds is divided into four categories: individuals, companies, governmental and semi-governmental entities, and funds, including Gulf investment funds.
The value of individuals' ownership of listed bonds and bonds reached 72.0 million riyals owned by 26 individuals at the end of the first quarter of 2020, compared to 74.5 million riyals owned by 24 individuals at the end of 2019.
Methods of trading in government bonds
Unlike investment funds, and two platforms for electronic trading of sukuk by two brokerage firms, two methods of trading sukuk are available to individuals, either by going to the headquarters of the brokerage firm and making a purchase or sale request, or the other way is to place the request by talking to the broker by phone.
However, the investor must conduct his own study of the issues, then choose the trading symbols and determine the amount of sukuk he desires
Fixed-income investment funds
Fixed-income debt instrument funds are like investment platforms, which generally invest in debt instruments such as bonds, bonds, etc., issued by companies, government and semi-government agencies, or any other entity entitled to issue any type of debt instruments. The prices of debt instruments on bonds and bonds are affected by several factors, for example, the interest rate, the bond’s rating from the rating companies, and the risks of stopping periodic payments from companies in case of default and are rare with public offerings.
Sharia Fatwa
The mechanism of making debt instrument offerings in the markets - which Al-Eqtisadia viewed - shows that issuers obtain a fatwa authorizing investment in Sukuk before marketing it to investors.
Therefore, the fatwa authorizing investment in government bonds has been obtained in advance. In July 2017, the National Center for Debt Management, on behalf of the Ministry of Finance, thanked him, in a press release, to the Development Bank that helped the center in structuring the Sukuk. Bearing in mind that issuers that do not have central Sharia bodies in their countries for banking activities, those bodies use the Sharia bodies of banks arranged for issuance in order to provide Sharia advice about structuring Sukuk and issuing a fatwa.
Looking at the Saudi dollar versions, we will find that they used the same structure of the hybrid instruments, which is used in conjunction with the local versions.
The 2017 issuance was authorized by the Sharia Councils of Banking Jurists, who work for the benefit of the banks arranging the issuance, in light of the absence of a central Sharia board specialized in Islamic transactions in the Kingdom.
Hybrid structuring
Sukuk are called "hybrid" so, because they contain a mixture of debt (The structure of profit) and ownership equity, and this means structuring speculation.
This is the structure that Saudi Arabia invests in savings bonds. With each issue, the proceeds are divided into two parts.
The first is an amount equivalent to 33 percent of the issuance proceeds (i.e. profit capital), so that the Sukuk holders agent purchases goods that are in compliance with the Sharia by a commodity broker (known as supplier 1), and then this agent sells those goods to the Kingdom (with a clear profit margin) And between, so that Saudi Arabia pays for what it bought with the margin at a later time.
This may help finance Sukuk payments (as well as profits, which will come from the Mudaraba contract projects revenue).
As for the second component of the issuance proceeds (not exceeding 67% of the total face value of the issuance), and the next for the Sukuk holders agent (who plays the role of the owner of the money for the benefit of investors) goes to the Ministry of Finance, which is the speculator.
Agreements related to the Mudaraba contract were signed between the Ministry of Finance and the Sukuk holders agent (the owner of the money), so that they would share a common ownership interest in the infrastructure projects portfolio (the investment portfolio), which the Kingdom would undertake (i.e. infrastructure projects) as it deems appropriate.
This is done on a profit-sharing basis, and the loss is charged in proportion to their share. The Kingdom has, according to the prospectus, the right to transfer investment funds for projects between what it deems appropriate from infrastructure projects (that is, the Kingdom can exchange portfolio assets with other assets).
In order to protect the rights of investors, the infrastructure projects that will be targeted will be evaluated. The Kingdom has the right to purchase any asset from the investment portfolio, and if this were done, the funds and profits resulting from the sale will be reinvested in an infrastructure project.
Economic Reports Unit
