Experts praise the progress of bond markets and privatization in Saudi Arabia

Experts in the private sector lauded Saudi Arabia’s development in the bond market and the country’s privatization efforts in a session titled “Taking stock: Building a competitive capital market in Saudi Arabia and the region,” that took place Wednesday at the Financial Sector Conference in Riyadh.

Moderated by Al Arabiya’s senior business reporter, Nadine Hani, the session’s speakers included HE Mohammed A. Elkuwaiz, the Chairman of Saudi Arabia’s Capital Market Authority (CMA), Mazin al-Romaih, the CEO of MARCO Strategic Advisors and the Chairman of Banque Saudi Fransi in Saudi Arabia, Luke Ellis, the CEO of Man Group in the UK, and Tom Finke, the Chairman and CEO of Barings in the US.

Bond market

On the subject of the bond market, Mazin al-Romaih said, “The Saudi Debt Management Office was set up almost a year ago, and I see tremendous work. They’ve done a wonderful job.”

“Going forward, areas we need to evolve in is the time it takes to issue a bond,” he added. “It is a new product that’s coming to our market.”

Luke Ellis said that he advocates a “continued effort to deepen the riyal government bond market.”

When asked about Aramco’s bond sale and any developments he would like to see, Tom Finke said, “Securitization is key. It’s one of the ways to bring investors in,” referring to the financial practice of transforming assets into securities.

Privatization

Al-Romaih described the effects of privatization as “profound,” adding that he believes the “electricity sector could also be privatized … along with telecoms [and] airports” in Saudi Arabia.

He lauded the government’s efforts toward privatization. “With privatization, there’s a lot of government guarantees that go hand-in-hand with it,” he said. “I think we need to stay the course, and I think a lot has been done … by the Ministry of Finance.”

“It is amazing to think how far the Saudi market has come,” Luke Ellis said. “There’s a marketing opportunity for Saudi because the quality of companies which have been IPO’d here is remarkably higher than it’s been in most privatization.”