Saudi Arabia seeing rising interest in credit ratings amid broader investments and economy diversification: Moody’s exec

Saudi Arabia seeing rising interest in credit ratings amid broader investments and economy diversification: Moody’s exec
Moody’s has contributed to enhancing financial literacy and the understanding of credit ratings among investors, businesses, and the general public in Saudi Arabia through various publications, forums, and conferences. (SPA)
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Updated 24 February 2024
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Saudi Arabia seeing rising interest in credit ratings amid broader investments and economy diversification: Moody’s exec

Saudi Arabia seeing rising interest in credit ratings amid broader investments and economy diversification: Moody’s exec
  • Moody’s activities in the Kingdom have positioned the organization as a key player in the financial markets

RIYADH: Saudi Arabia is seeing a growing interest in credit ratings, mainly driven by expanding global investments, regulatory reforms, and economic diversification, according to Moody’s.

Jihad Al-Toukhi, senior vice president and relationship manager at Moody’s Saudi Arabia, affirmed in an interview with Arab News that the firm has “indeed observed a growing interest in credit ratings” in the Kingdom. 

Al-Toukhi pointed out that this heightened interest can be attributed to various factors. 

“Firstly, the ongoing financial market development, as part of Saudi Arabia’s Vision 2030 plans, has boosted the demand for credit ratings. These ratings provide an independent assessment of credit risk, which is crucial for facilitating investment decisions, including foreign direct investment,” he said. 

Moreover, as Saudi companies aim to expand their presence globally, their reliance on financing through debt capital markets has grown. Consequently, credit ratings have become indispensable in providing unbiased assessments of risk, vital for potential international investors or lenders, according to the official. 

Al-Toukhi went on to explain: “Regulatory bodies in Saudi Arabia are increasingly requiring credit ratings for certain types of financial transactions to enhance transparency and understanding of credit risk. This regulatory change has, in turn, increased the demand for credit rating services.” 

Furthermore, with the Kingdom’s shift away from oil-dependency, new sectors and businesses are emerging, all of which require credit ratings to secure funding and entice investors. Al-Toukhi emphasized Moody’s role, describing it as being “instrumental in cultivating a credit rating culture in the region.” 

He added: “Our role is to provide independent, objective opinions and analysis of credit risk, which are essential for the financial market development, international investments, regulatory compliance, and economic diversification efforts currently underway in Saudi Arabia.”

Discussing industries that have seen significant developments in terms of credit ratings, Al-Toukhi noted: “We have observed a substantial interest from the insurance sector and large corporates in obtaining credit ratings.”

Acknowledging the importance of Islamic finance in the local economy, Al-Toukhi remarked: “Islamic finance is indeed a significant component of the Saudi financial system, and Saudi Arabia is recognized as the world’s largest Islamic finance market.”




Jihad Al-Toukhi, senior vice president relationship manager at Moody’s Saudi Arabia. (Supplied)

“Our approach to assessing Islamic financial instruments is thorough and meticulous. Our expert analysts provide valuable ratings for Sukuk issuances based on thorough analysis,” he stated.

Looking ahead to 2024, the expert anticipated a “continued expansion and development of this segment in KSA and the region.”

Al-Toukhi anticipated that the increased role of government-related institutions and the private sector in Saudi Arabia’s financial environment is expected to have a “transformative impact.”

He further explained: “Firstly, it demonstrates a diversification of the Saudi economy, which has traditionally been heavily reliant on oil revenues. Secondly, the involvement of government-related institutions can provide a level of stability and confidence in the market.”

Al-Toukhi pointed out that the increased participation of the private sector can lead to increased competition, which can result in better pricing and more efficient allocation of resources.

“Lastly, the increased activity in the debt capital market can lead to greater liquidity, making it easier for both companies and investors to buy and sell securities,” Al-Toukhi concluded, highlighting the potential benefits of increased activity in the debt capital market.

Speaking of Moody’s plans, the senior vice president shared that a number of strategic initiatives are in place to further enhance presence and influence in the Kingdom’s financial markets. “One of our key strategic initiatives is to increase our educational endeavors,” he explained.

“In addition to our educational initiatives, Moody’s also plans to leverage technology to improve our services and operations,” Al-Toukhi added.

Moody’s believes that several factors will play a crucial role in shaping the credit landscape in the coming years.

“Saudi Arabia is becoming more transparent in its financial dealings, thanks to the efforts of regulators to improve and stimulate the debt markets,” Al-Toukhi explained, highlighting the efforts to improve transparency in financial dealings.

He emphasized the growth of the firm’s local footprint since the inception of its office, saying: “Since opening the Moody’s office in Saudi Arabia in 2018, we have had tremendous success in expanding our local presence and coverage. We now have 39 entity ratings in the Kingdom and rate $200 billion of debt.”




Moody’s activities in the Kingdom have positioned the organization as a key player in the financial markets, and specifically in the debt capital market, supporting the country’s economic transformation and growth. (AN file photo)

The thriving financial landscape in Saudi Arabia is boosting investor confidence and market maturity, Al-Toukhi affirmed, saying: “Being on-ground in Saudi Arabia has allowed Moody’s to better cater to the specific needs of the local market. This has helped in building stronger relationships with clients and stakeholders within the country.”

Al-Toukhi said that Moody’s has contributed to enhancing financial literacy and the understanding of credit ratings among investors, businesses, and the general public in Saudi Arabia through various publications, forums, and conferences.

He stated: “We are also actively engaging with local regulatory bodies ensuring we stay up to date with the evolving regulatory landscape in the Saudi financial markets, which we are happy to do.”

Moody’s activities in the Kingdom have positioned the organization as a key player in the financial markets, and specifically in the debt capital market, supporting the country’s economic transformation and growth, according to the top official.

Discussing the extensive ratings coverage in Saudi Arabia, Al-Toukhi underscored the agency’s comprehensive analysis, covering 100 percent of all Islamic and conventional banks and major corporations like Saudi oil giant Aramco and petrochemicals manufacturer Sabic.

“In fact, we have the highest coverage in Saudi Arabia across both corporate finance and financial institutions. This broad and deep coverage enables our analysts to provide a more comprehensive and accurate analysis of the creditworthiness of entities,” he remarked, emphasizing the breadth and depth of Moody’s coverage in the Kingdom.

As the Saudi economy diversifies away from oil, the firm anticipates growth in sectors like technology, renewable energy, and tourism.

“One significant development we are observing is the growing awareness and integration of Environmental, Social, and Governance factors into investment decisions,” said Al-Toukhi.

According to the official, Moody’s has been offering Second-Party Opinions on the environmental credentials of financial instruments such as green, social, and sustainability bonds.

“Overall, we believe these factors will play a significant role in shaping the credit landscape in Saudi Arabia in the coming years,” Al-Toukhi said, expressing optimism about the future of the credit landscape in the Kingdom.


Egypt to increase funds for health sector by 25% in upcoming budget

Egypt to increase funds for health sector by 25% in upcoming budget
Updated 10 sec ago
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Egypt to increase funds for health sector by 25% in upcoming budget

Egypt to increase funds for health sector by 25% in upcoming budget

RIYADH: Egypt will increase health sector allocations in the next general budget to 495.6 billion pounds ($10.4 billion), according to the country’s finance minister. 

The North African country’s upcoming fiscal year is set to begin in July. Mohamed Maait said in a statement that this reflects an annual growth rate of 24.9 percent compared to the funds allocated for the sector in the current fiscal. 

This is in line with the nation’s goal to improve medical services for citizens, which is also an objective of Egypt’s Vision 2030.

Moreover, the minister added that allocations for the education sector will also be raised to 858.3 billion pounds, with an annual growth rate of 45 percent. 

Scientific research reserves are also on track to increase to more than 139.5 billion pounds in the next budget, reflecting an annual growth rate of 40.1 percent.


Oman’s top 5 ports handle over 93.2m tonnes of cargo in 2023

Oman’s top 5 ports handle over 93.2m tonnes of cargo in 2023
Updated 6 min 42 sec ago
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Oman’s top 5 ports handle over 93.2m tonnes of cargo in 2023

Oman’s top 5 ports handle over 93.2m tonnes of cargo in 2023

RIYADH: Oman’s top five ports saw a 1.5 percent annual increase in cargo handling in 2023, surpassing 93.2 million tonnes, underscoring their growing significance in maritime trade.  

The terminals of Sultan Qaboos, Salalah Sohar and Khasab as well as Shinas, and A’Suwaiq handled approximately 91.8 million tonnes of general, liquid, and bulk cargo in 2022, according to the Oman News Agency. 

It also highlighted a significant increase in the number of berthed ships in 2023, reaching approximately 11,005 vessels compared to 10,553 watercraft in 2022, marking a 4.3 percent rise. 

Cruise ship passengers at the Sultan Qaboos, Salalah, and Khasab Ports have increased considerably. This achievement reflects the government’s collaborative efforts with tourism partners to enhance hospitality traffic to Oman. 

The news agency added that the government succeeded in attracting major cruise ship operators to several Omani connection points, including Salalah, Khasab, and Sultan Qaboos Port. 

It also reported that in 2023, 229 cruise ships brought 599,000 passengers to Omani terminals, compared to around 87 ocean liners carrying over 205,000 travelers in 2022. This represents an increase of over 190 percent in commuters. 


Saudi ADES secures $93.3m contract to operate jack-up rig in Qatar

Saudi ADES secures $93.3m contract to operate jack-up rig in Qatar
Updated 30 min 45 sec ago
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Saudi ADES secures $93.3m contract to operate jack-up rig in Qatar

Saudi ADES secures $93.3m contract to operate jack-up rig in Qatar

RIYADH: Saudi drilling firm ADES is set to operate a SR350 million ($93.3 million) jack-up rig in Qatar, having secured a contract from TotalEnergies.  

ADES noted in a statement to Tadawul that the letter of award from the French petroleum company includes a mandatory and optional extension period of up to 18 months. 

The project is expected to commence in the second half of 2024, utilizing the firm’s fleet of jack-up offshore drilling units. 

Additionally, ADES indicated that the contract will enable it to maintain its market share in Qatar by operating three drilling rigs. This comes after the relocation of its Emerald Driller platform to Indonesia, anticipated to take place in the second half of 2024. 


 


Najran Municipality introduces 20 investment opportunities in Yadamah governorate 

Najran Municipality introduces 20 investment opportunities in Yadamah governorate 
Updated 58 min 59 sec ago
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Najran Municipality introduces 20 investment opportunities in Yadamah governorate 

Najran Municipality introduces 20 investment opportunities in Yadamah governorate 

RIYADH: Saudi Arabia’s Najran Municipality has unveiled 20 diverse investment opportunities across the governorate of Yadamah, encompassing commercial, sports, recreational, shopping, and event activities. 

These prospects are dispersed across various locations within the locale, including parks, squares, main roads, and public walkways, as reported by the Saudi Press Agency. 

The municipality clarified that the investment opportunities range from temporary agreements to investment deals spanning five to 25 years in various activities. It invited interested investors to review the possibilities and details of the competition through the Forsah platform, which translates to “opportunity” in English.


Saudi Arabia’s point-of-sale transactions grew 20% to reach $14.33bn in February  

Saudi Arabia’s point-of-sale transactions grew 20% to reach $14.33bn in February  
Updated 14 April 2024
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Saudi Arabia’s point-of-sale transactions grew 20% to reach $14.33bn in February  

Saudi Arabia’s point-of-sale transactions grew 20% to reach $14.33bn in February  

RIYADH: Payments made through point-of-sale terminals in Saudi Arabia experienced a notable 20 percent annual increase in February, totaling SR53.72 billion ($14.33 billion), the latest data showed.   

According to data released by the Saudi Central Bank, the largest portion of POS spending in February was allocated to beverages and food, comprising 15.7 percent of the total at SR8.43 billion. This was followed by spending on restaurants and cafes, accounting for 15 percent of the total and reaching SR8.02 billion. 

A POS is where purchases are made in a store, like when items are paid for at the cash register or when a card is swiped.  

The rise in POS payments mirrors the Kingdom’s drive toward digital transformation and its investments in a technology-centric future. The nation is actively seeking initiatives to nurture sustainable urban development and a thriving digital economy.  

More than 93 percent of those sales use near-field communication technology through mobile phones and cards. 

NFC methods have transformed contactless payments in Saudi Arabia, enabling transactions to be completed with a mere tap of a card or smartphone. Its popularity stems from its rapidity and hygienic benefits, minimizing the necessity for physical contact.  

As consumer acceptance grows, businesses are quickly incorporating NFC technology into their payment systems. This approach aligns with customer desires for efficiency and speed, and integrates sophisticated security features to safeguard against fraud.  

Data from the central bank revealed the closure of 349 ATMs since February 2023. Conversely, the issuance of 5.4 million cards during this period suggests a shift from physical cash toward digital methods.  

The data also showed a notable increase in spending on miscellaneous goods and services, including personal care items, supplies, maintenance, and cleaning, which made up the largest share at 20 percent of the total rise in POS sales during the mentioned period. This category constituted 12 percent of the total expenditure in February 2024, amounting to SR6.5 billion and experiencing a growth rate of 39 percent.  

The POS payments for miscellaneous goods showed the highest growth rate among all categories, with hotels following closely behind, increasing by 28 percent during this period to reach SR1.52 billion.  

Additionally, beverages, food, and jewelry each experienced a boost of 23 percent and 21 percent, respectively.   

Riyadh dominated the POS sales, accounting for 34 percent of the total, followed by Jeddah with 14 percent. 

The capital city’s population surged from half a million in 1972 to over 7.8 million in 2024. This growth, coupled with increased urbanization and the concentration of numerous international headquarters, has positioned the municipality as a bustling hub where most sales transactions occur.