S&P forum to study risks for Saudi debt capital markets

A forum hosted by Standard & Poor’s Ratings Services (S&P), the world's major provider of independent credit risk research, analytics and benchmarks, will discuss the opportunities and challenges facing conventional and Islamic bond issuance in Saudi Arabia. The event is set to take place in Riyadh on Tuesday.
Themed "Navigating the risk dimension in 2014," the forum will explore a wide range of developments shaping the growth of Saudi debt capital markets in the context of key rating analytical, process and criteria developments. The event is designed for CEOs, CFOs, treasurers, advisers, bankers, financial intermediaries and institutional investors.
Stuart Anderson, managing director and regional head, Middle East, S&P, said: “A variety of factors are creating a strong impetus for growth in Saudi and GCC capital markets, including strong economic prospects; continued need for infrastructure investments; new regulation supportive of capital markets, including the implementation of Basel III; growing demand for Islamic finance; and low interest rates resulting from accommodative central bank policies around the world.”
The S&P Forum will outline how ratings can further support the growth of deep and liquid debt capital markets.
“Ratings greatly enhance the transparency and efficiency of debt capital markets, generating greater local, regional and global exposure for issuers, and contributing significantly to their development and diversification for the benefit of investors and financial market intermediaries,” Anderson said.
The event will discuss ratings prospects for four key sectors — corporate and infrastructure; sovereign; banking; and insurance.
The last three months of 2013 saw increased issuance in GCC capital markets, driven partly by growth in Islamic finance. This momentum has continued into the first quarter of 2014, with Saudi Electric Company’s SR4 billion sukuk being one of the key issuances this year among S&P-rated companies.
Corporate and infrastructure issuers in Saudi Arabia and the region have benefited from sustained positive economic fundamentals and strong appetite from regional and international investors for high credit quality paper. Among GCC sovereigns rated by S&P, Saudi Arabia is the only one to have a positive outlook, while all others carry stable outlooks.
The liquid banking sector is another key factor that underpins the positive credit profiles of corporate and infrastructure issuers both in the Kingdom and the region.
The overall profitability of Saudi banks will be a highlight of the discussions at the forum. Over the last year, Saudi banks have fared better than their peers in developed markets, showing consistently strong profitability and low risk profile.
Andreas Kindahl, managing director, S&P Ratings Services, will present his outlook on the corporate and infrastructure sector in the region while S&P analysts Christian Esters and Timucin Engin will deliver their prognosis for GCC sovereigns and the banking sector respectively.
Other S&P analysts Karim Nassif and Kevin Willis will lead workshops on corporate and infrastructure and insurance ratings.
Michael Baker, managing director and head of solutions and services, S&P Capital IQ, will present case studies on credit risk modeling in the GCC.