GCC, Japan Announce Resumption of Free Trade Agreement Negotiations

The GCC and Japan signed a joint statement on the resumption of Free Trade Agreement negotiations. SPA
The GCC and Japan signed a joint statement on the resumption of Free Trade Agreement negotiations. SPA
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GCC, Japan Announce Resumption of Free Trade Agreement Negotiations

The GCC and Japan signed a joint statement on the resumption of Free Trade Agreement negotiations. SPA
The GCC and Japan signed a joint statement on the resumption of Free Trade Agreement negotiations. SPA

The Gulf Cooperation Council and Japan announced on Sunday the resumption of Free Trade Agreement negotiations, by signing a joint statement on the sidelines of a meeting held by Japanese Prime Minister Fumio Kishida and the Secretary General of the GCC, Jassem Mohamed Albudaiwi, in Jeddah.

Albudaiwi said the announcement comes in implementation of the directives of the Ministerial Council to ink free trade agreements with the trade partners of the GCC countries as part of the priorities that were agreed to accomplish at its session which took place in June 2022.

He added that Japan is considered as one of the priorities of the Council Cooperation with which it seeks to bolster strategic, economic, development and investment relations.

He expressed the hope of GCC member states to consolidate trade and investment ties between the two sides through this agreement, highlighting its role in launching a new era of partnership that is aimed at providing many opportunities for joint growth for the business communities of both sides, especially in priority sectors.

Moreover, Albudaiwi pointed out that the agreement will pave the way for the development of a comprehensive economic framework based on mutual interests, which, in return, would establish stronger strategic cooperation, promote innovation, stimulate economic growth, and create job opportunities for both sides.

He emphasized the strategic and important bonds between the GCC countries and Japan in all areas, most notably the high level of political coordination, as well as cooperation in the field of energy and trade exchange, indicating that Japan ranked fourth in terms of exports from Gulf countries with a value of $76.7 billion and ranked fourth in terms of imports from the GCC, which are valued at $22 billion.



S&P Expects Saudi Issuances to Continue Domestically, Internationally Driven by Vision 2030

A view of the Saudi capital, Riyadh. (SPA)
A view of the Saudi capital, Riyadh. (SPA)
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S&P Expects Saudi Issuances to Continue Domestically, Internationally Driven by Vision 2030

A view of the Saudi capital, Riyadh. (SPA)
A view of the Saudi capital, Riyadh. (SPA)

S&P Global Ratings anticipates that Saudi issuers will continue to tap local and international capital markets to finance projects under Saudi Arabia’s Vision 2030. The agency expects debt levels to remain manageable, with private sector debt-to-GDP ratios staying below 100% over the next 12 to 24 months.

According to S&P’s report, “Saudi Capital Market Overview: Rising Issuance Levels Are Just the Start”, Saudi companies have dominated issuance activity in recent years. Over the past five years, Saudi entities, including government-related entities, have accounted for roughly two-thirds of non-governmental US dollar-denominated issuances. However, the report predicted that banks will play an increasingly significant role in the future.

The report noted that Saudi issuers have raised over $130 billion in US dollar-denominated issuances over the last five years. This adds to $144 billion raised domestically in Saudi riyals during the same period, driven by Vision 2030 initiatives.

While the government accounts for about 60% of these issuances, the Kingdom’s Vision 2030 has created expansive opportunities in the non-oil economy and banking system, paving the way for future growth, the report underlined.

S&P highlighted the development of Saudi Arabia’s mortgage-backed securities market as a key factor to watch over the next two years. As of the end of September 2024, Saudi banks held more than $175 billion in mortgage financing, most of which carried fixed interest rates but were funded through short-term resources, primarily local deposits.

With declining interest rates, some of these mortgages could re-enter circulation, enabling banks to sell them in the secondary market without incurring losses. This would allow banks to offload mortgage financing from their balance sheets, provided legal challenges surrounding the mortgage-backed securities issuance are resolved or mitigated sufficiently to attract local and international investor interest.

According to the report, developing the mortgage-backed securities market could significantly enhance banks’ financial capacity, enabling them to better support the implementation of Vision 2030. This could occur through existing infrastructure, such as the Saudi Real Estate Refinance Company, or via direct issuances in the capital markets.