Saudi finance chiefs welcome Moody’s sukuk rating

Saudi Arabia’s Minister of Finance Mohammed Al-Jadaan. (Reuters)
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Updated 09 October 2020

Saudi finance chiefs welcome Moody’s sukuk rating

  • Moody’s has assigned a top rating to the government’s Riyal-denominated Islamic bond program
  • FM Mohammed Al-Jadaan said the rating reflected “the strength, flexibility and capability of the Kingdom’s economy in facing global economic challenges”

LONDON: Saudi finance chiefs have welcomed the latest ratings agency stamp of approval for the Kingdom’s sukuk program.

Moody’s this week assigned a top rating to the government’s Riyal-denominated Islamic bond program. 
Such ratings are used by investors to gauge the creditworthiness of countries and companies.
Moody’s issued a provisional (P) A1 senior unsecured MTN global scale rating and Aaa.sa senior unsecured national scale rating to the government’s sukuk program.
Finance Minister Mohammed Al-Jadaan said the rating reflected “the strength, flexibility and capability of the Kingdom’s economy in facing global economic challenges.”
Gulf states including Saudi Arabia are selling Islamic bonds, also known as sukuk, to help fund public spending and infrastructure projects amid weaker oil prices and the ongoing economic fallout from the coronavirus pandemic.
National Debt Management Center CEO Fahad Al-Saif, said that the move by Moody’s showed “the depth of the local debt market by providing a risk-free yield curve.”
The introduction of the national scale rating is expected to further attract foreign investors in the local debt capital market, he said.
Credit rating reports for domestic issuances are opinions on the creditworthiness of public and private issuers as well as financial obligations related to other issuers within a country. 
The credit rating of domestic issuances deals with the relative risk within a country (relative to the Sovereign issuance rating), while the credit rating of international sukuk sakes is based on a cross-country comparison.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.