As well as the expected regulations covering non-bank financial intermediaries, Nahed Taher, adviser to the CMA, says that the authority will soon issue debt capital market regulations, and the market itself should be up and running within months. Like the other facets of the capital markets law, this has taken some time to put into effect: the CMA announced last July that it was discussing "rules, directives and procedures relevant to the capital market as prescribed by the capital market law," and that "work is in progress to develop the primary market". Taher considers a primary debt market to be "essential for financing mega-projects in the coming period, as a tool of long-term lending." The financing requirements of such projects, which are mainly in the petrochemicals sector and infrastructure, are estimated to be about $600 billion by 2020 and "have to start immediately". She says the market's main focus will be sukuk (Shariah-compliant asset-backed securities), and predicts that the finance ministry or state corporations such as Sabic will be the first to issue bonds, issuing long-term paper (with 20 to 30 years' maturity) in order to establish a benchmark. The private sector should then follow.
July 01, 2005
