The Saudi Capital Market Authority (CMA) has given Moody's the license to operate rating activities in Saudi Arabia, joining the two major foreign credit rating agencies Fitch and Standard & Poor's, as the country seeks to develop its corporate debt capital markets.
A statement from the regulatory body said Monday “the CMA Board of Commissioners has issued its resolution authorizing Moody's Investors Service Middle East Limited to conduct credit rating activities in the Kingdom.”
Saudi Arabia's corporate sector has traditionally relied on the bank loan market to back its funding requirements.
But since low oil prices started impacting liquidity in the local banking system, authorities have encouraged more bond issuances as bonds allow a larger investor base such as insurance and pension funds to be tapped, therefore reducing the strain on the banking system.
The sovereign itself issued its first international bond last year – a record breaking $17.5 billion issuance – to plug a budget deficit caused by lower oil prices. The bond was followed by a $9 billion international sukuk earlier this year and, this month, by the launch of a domestic sukuk program through an issuance equivalent to $4.5 billion.
Standard & Poor's obtained a similar license last October. It was followed by Fitch, which obtained the same permission last April. The CMA started receiving applications to conduct credit rating in 2015.
