SSGA Launches Saudi Arabia Sovereign Bond in Europe

The US-based State Street Global Advisors (SSGA), the asset management business of State Street Corporation which is listed on New York Exchange, has launched the Ireland domiciled SPDR J.P. Morgan Saudi Arabia Aggregate Bond UCITS ETF (KSAB) to be listed on the Dutch bourse Xetra and London Stock Exchange (LSE).

The new fund aims to track the newly created index J P Morgan Saudi Arabia Aggregate Index, developed in close collaboration with SSGA, to provide investors with exposure to the performance of liquid, US dollar-denominated and Saudi riyal-denominated government and quasi-government bonds, including Sukuks bonds. It is tradable on Frankfurt and London’s stock exchanges with a total expense ratio of 0.37%.

Emmanuel Laurina, Head of Middle East, Africa and Official Institutions, SSGA, said that they were pleased to offer investors cost effective access to the fast growing fixed income market in Saudi Arabia, one of the leading issuers of investment grade international bonds among emerging markets. “As the Kingdom continues to diversify its economy through energy transition, infrastructure and other growth initiatives, we believe there are appealing investment themes for international investors to capture through a diversified exposure to Saudi bonds,” Laurina added.

Saudi Bond Market Grows              

Growth of the Saudi bond market has accelerated over recent years, driven in part by the Kingdom’s Vision 2030. The total amount of outstanding bonds issued by Gulf Cooperation Council (GCC) countries has more than tripled since 2019, reaching nearly $1.35 trillion in September 2024.

The fund is available to investors in Austria, Denmark, France, Finland, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden, and the UK.

Saudi Arabia has been the leading emerging market issuer of sovereign and quasi-sovereign international bonds, and experts predict the Kingdom will expand its borrowings further to help fund infrastructure spending.

Saudi Arabia, the Middle East’s largest economy despite a 0.8% decline in real GDP last year, sold $26.8 billion of international bonds from January 1 to August 27 2024.

The Kingdom was also the leading emerging market issuer of international sovereign debt in 2023, selling $26.5 billion of bonds. Its debt raising in 2024 has already topped last year’s total.

The Kingdom has sold a relatively paltry $7.9 billion of international bonds in 2022 and $4 billion in 2021 before increasing its borrowings from the start of 2022 despite soaring interest rates, according to a report published by Arabian Gulf Business Gulf Insight.

The London-based Financial Times reported that SSGA, the world’s fourth-largest money manager with more than $4.7 trillion in assets, added that growth of the Saudi bond market had accelerated over recent years, driven in part by the kingdom’s Vision 2030, a government programme that aims to diversify the economy, society and culture.

Franklin Templeton in October launched an actively managed Saudi Arabia-focused bond strategy for European investors, the Franklin Saudi Arabia Bond Fund, as well as a Saudi Arabian equity ETF, the FT report added.