Saudi sukuk index entry to broaden debt market

Saudi Arabia's local-currency debt market is set to see increased foreign investment as riyal-denominated government sukuk are slated to join JPMorgan's Government Bond Index-Emerging Markets series starting in 2027, according to Fitch Ratings. The planned inclusion is expected to draw more overseas capital into a market that is already more advanced than similar markets in the Gulf Cooperation Council.

In the first half of 2026, foreign investors made up 15% of Saudi sovereign primary debt issuance, up from 12% in 2025 and 8% in the first quarter of 2026. JPMorgan will gradually add eligible Saudi government sukuk to the GBI-EM indices from January 29, 2027. The Ministry of Finance anticipates eight riyal-denominated government sukuk issues, valued at around $69 billion, will be included in the JPMorgan index once the addition is finalized.

With a projected weight of about 2.52%, Saudi Arabia would hold about 2.52% of the GBI-EM Global Diversified index after completion of the inclusion. Additionally, Bloomberg Index Services plans to add eligible Saudi riyal government sukuk to its Emerging Market Local Currency Government Index in the April 2027 rebalancing. Saudi riyal sovereign sukuk have been included in other international benchmarks, such as FTSE Russell's Emerging Markets Government Bond Index since 2022.

The development of the domestic debt market in Saudi Arabia has been driven by efforts to establish a domestic yield curve, improve local-market liquidity, and reduce reliance on foreign-currency financing.