S&P Global opens in Riyadh as credit ratings agencies eye growth in Kingdom’s debt markets

S&P Global Ratings has expanded its operations in the Middle East with the opening of a branch in Riyadh's Kingdom Tower. (Reuters)

LONDON: S&P Global Ratings has opened a branch in Riyadh, becoming the first international credit rating agency to be fully licensed to operate in Saudi Arabia.
S&P’s move into the Kingdom comes as the country strives to expand its capital markets by encouraging more Saudi companies to issue debt — an option that will require them to obtain a credit rating.
Typically, domestic corporates have mainly used bank loans to meet their financing needs.
The growth of the capital markets will also help the Kingdom fulfil its Vision 2030 plans to diversify its economy away from its dependency on oil.
“As Saudi Arabia’s capital markets evolve to match the size of the country’s economy, there is a prime potential for greater debt issuance,” said Meshari Al-Khaled, the newly appointed office head and managing director for the office.
“Only 15 percent of listed companies in Saudi Arabia have a credit rating so there is a significant opportunity for S&P Global Ratings to serve investors through our objective evaluation of risk for governments, corporates and financial institutions,” he said.
John Berisford, president of S&P Global, added: “The CMA’s 2020 ambitious enabling program presents significant opportunities for the country and investors alike.
“As the first international credit rating agency in the country, we are pleased to be able to facilitate access to capital for governments and companies and look forward to supporting the further development of transparent and liquid debt markets in the Kingdom.”
S&P received its final license from Saudi Arabia’s Capital Market Authority (CMA) after having been pre-approved last October. The new office will be based in Kingdom Tower in central Riyadh.
Al-Khaled — a Saudi national who will head up the agency’s Riyadh operations — has worked for the last 11 years with the government entity, the Saudi Arabian General Investment Authority (SAGIA), to drive foreign investment into the country.
Before that, he had worked within Saudi Arabia’s Alawwal Bank’s investment banking unit.
“I am now eager to support the development of the Kingdom’s economy working with S&P Global Ratings, whose credit ratings play a key role in enabling corporations and governments to raise capital,” he said.
The new office was launched with a formal event in Riyadh on Oct. 23, attended by senior government officials and executives from various financial institutions and publicly-listed companies.
The other two major international rating agencies, Fitch and Moody’s, won approval to operate in the Kingdom in April and July this year.
S&P’s Riyadh launch followed news on Monday that the initial public offering (IPO) of the country’s national oil company, Saudi Aramco will happen in 2018 as planned, according to the company’s CEO Amin Nasser in a CNBC interview.