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S&P Starts Operations in Riyadh

S&P Starts Operations in Riyadh

Tuesday, 24 October, 2017 - 12:00
Standard and Poor’s Global Ratings- PHOTO: Getty Images

Standard and Poor’s Global Ratings has opened a branch in Riyadh after receiving its final license from Saudi Arabia’s Capital Market Authority (CMA), it said on Monday, the latest sign of Saudi Arabia’s efforts to develop its local corporate debt markets.

S&P Global Ratings has appointed Meshari al-Khaled as S&P Global Ratings’ Managing Director and office Head for its Saudi Arabian branch.

“As Saudi Arabia’s capital markets evolve to match the size of the country’s economy, there is a prime potential for greater debt issuance,” Khaled said in a statement reported by Reuters.

“Only 15 percent of listed companies in Saudi Arabia have a credit rating so there is a significant opportunity for S&P Global Ratings to serve investors through our objective evaluation of risk for governments, corporates and financial institutions.”

Companies in the Gulf’s largest economy have traditionally relied on bank loans to support their financing requirements, but the impact of lower oil prices have reduced liquidity in the banking sector. Therefore, the government has taken steps to encourage companies to raise money by selling bonds to reduce pressure on local banks’ liquidity.

The final license obtained by S&P Global Ratings allows the agency, one of the three major global rating agencies, to conduct credit rating activities in the Kingdom.

S&P was the first international credit rating agency to obtain pre-approval from the CMA in October 2016.

The other two major foreign credit agencies Fitch and Moody’s obtained such permissions in April and July this year, respectively.

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