Extension of the exemption from fees on debt instruments in Saudi Arabia until 2027
In a strategic move aimed at deepening the Saudi capital market, the Capital Market Authority (CMA) Board approved extending the exemption from fees collected by the CMA, in addition to the CMA bearing the fees due to the Saudi Stock Exchange (Tadawul) and the Securities Depository Center (Edaa) related to debt instrument issuance requests. According to the new decision, this exemption will continue until the end of 2027, provided that issuers adhere to specific credit rating requirements.
Context of the decision and the financial sector development program
This decision comes as an extension of the directions initiated by the Authority in July 2020, and falls directly within the objectives of the Financial Sector Development Program, one of the main pillars of the Kingdom’s Vision 2030. Through these initiatives, the Kingdom seeks to create a sophisticated and efficient debt market that parallels the stock markets, which contributes to diversifying the sources of financing for the national economy and reducing exclusive dependence on traditional bank loans, which enhances the stability of the financial system as a whole.
Strengthening the sukuk market and attracting capital
The Authority explained that the primary objective of extending the exemption is to support and develop the sukuk and debt instrument market, and to encourage companies and issuers to utilize these financing channels. This decision is expected to enhance the attractiveness of the Saudi market to local and international investors and broaden its participant base. It also empowers national companies to secure long-term financing at competitive rates, thus supporting their expansion plans and major capital projects.
The importance of credit rating and transparency
The Authority has linked eligibility for the exemption to the requirement that the issuer or issuance has a publicly available and disclosed credit rating from a licensed rating agency. This step is crucial for raising the quality of issuances in the market and improving levels of disclosure and transparency. A publicly available credit rating enhances investor confidence by providing a reliable benchmark for assessing risk, thus facilitating investment decisions and increasing the efficiency of debt instrument pricing.
Details of exemptions for public and private offerings
The Capital Market Authority (CMA) has extended the scope of the exemption to include debt instrument offerings by listed non-governmental entities. Regarding private placements, the CMA stipulated that the offering size must not exceed SAR 500 million, with fees covered for a maximum of two issuances per issuer. The CMA affirmed its commitment to covering the Tadawul and Edaa fees, up to a maximum of SAR 5 million annually for all offerings until 2027. Applications exceeding this financial ceiling will be considered, reflecting a balance between the support provided and financial sustainability.
