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)
Updated 24 October 2017
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S&P Global opens in Riyadh as credit ratings agencies eye growth in Kingdom’s debt markets

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.


Can a hungry Mali turn rice technology into ‘white gold’?

Updated 34 min 12 sec ago
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Can a hungry Mali turn rice technology into ‘white gold’?

  • Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change
  • Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983

BAGUINEDA: When rice farmers started producing yields nine times larger than normal in the Malian desert near the famed town of Timbuktu a decade ago, a passerby could have mistaken the crop for another desert mirage.
Rather, it was the result of an engineering feat that has left experts in this impoverished nation in awe — but one that has yet to spread widely through Mali’s farming community.
“We must redouble efforts to get political leaders on board,” said Djiguiba Kouyaté, a coordinator in Mali for German development agency GIZ.
With hunger a constant menace, Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change.

 

Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983. It involves planting fewer seeds of traditional rice varieties and taking care of them following a strict regime.
Seedlings are transplanted at a very young age and spaced widely. Soil is enriched with organic matter, and must be kept moist, though the system uses less water than traditional rice farming.
Up to 20 million farmers now use SRI in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast, said Norman Uphoff, of the SRI International Network and Resources Center at Cornell University in the US.
But, despite its success, the technique has been embraced with varying degrees of enthusiasm. Uphoff said that is because it competes with the improved hybrid and inbred rice varieties that agricultural corporations sell.
For Faliry Boly, who heads a rice-growing association, the prospect of rice becoming a “white gold” for Mali should spur on authorities and farmers to adopt rice intensification.
The method could increase yields while also offering a more environmentally-friendly alternative, including by replacing chemical fertilizers with organic ones, he said.
He also pointed out that rice intensification naturally lends itself to Mali’s largely arid climate.

FACTOID

Up to 20 million farmers now use rice intensification in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast.