Saudi government sukuk indices have achieved a major milestone with inclusion in major international bond indices, marking a significant development for the Kingdom’s debt market. J.P. Morgan announced the inclusion of Saudi Riyal-denominated government sukuk in the Government Bond Index-Emerging Markets (GBI-EM), effective January 29, 2027, on a phased basis with an expected weight of 2.52% of the index. Bloomberg Index Services Limited simultaneously announced the inclusion of Saudi Riyal-denominated government sukuk in the Bloomberg Emerging Market Local Currency Government Index, with implementation expected at the April-end 2027 index rebalancing.
Finance Minister Mohammed Aljadaan said the dual inclusion reflects confidence in Saudi Arabia’s economic resilience and demonstrates the government’s commitment to developing the financial sector under the directives of King Salman bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman. The inclusion aligns with targets of the Financial Sector Development Program, one of the initiatives under Saudi Vision 2030, which aims to deepen capital markets, broaden the investor base, and enhance government financing efficiency.
Index Inclusion Details and Coverage
J.P. Morgan’s inclusion is expected to cover eight issuances of Riyal-denominated government sukuk with a total nominal value of approximately USD 69 billion. Bloomberg Index Services specified that eligible securities are Saudi Riyal-denominated fixed-rate government sukuk with a remaining minimum maturity of at least one year and a minimum amount outstanding of SAR 1 billion. The new index version including Saudi Arabia is expected to be published in the third quarter of 2026.
Market Development Initiatives Supporting Inclusion
The dual inclusion follows several developmental initiatives in the local debt market. The Kingdom expanded the Primary Dealers Program to include international banks, enhanced settlement mechanisms to facilitate trading for international investors, and introduced an Over-the-Counter (OTC) settlement framework in mid-2025. Additionally, the government strengthened connectivity with international central securities depositories such as Euroclear. Bloomberg and J.P. Morgan cited these improvements as key factors supporting their inclusion decisions.
Expected Impact on Saudi Debt Market
Aljadaan stated that the inclusion of Saudi Riyal-denominated sukuk will increase the presence of Saudi debt instruments within global investment portfolios, enhance liquidity in the secondary market, and raise the international competitiveness of the local debt market. The inclusion reinforces the role of the Saudi capital market as a leading market in the region and reflects comprehensive reforms that have enhanced capital market efficiency, increased transparency, developed regulatory infrastructure, and strengthened liquidity. These developments position the Kingdom as a trusted investment destination at the international level.
Strategic Significance for Financial Sector
The inclusion represents an extension of the Kingdom’s comprehensive reform path in financial markets. It demonstrates the effectiveness of regulatory improvements and infrastructure enhancements implemented over recent years. By broadening access to Saudi debt instruments through major international indices, the Kingdom attracts a wider range of global investors and strengthens the foundation for continued economic development aligned with Vision 2030 objectives.
