Over the past five years, Saudi Arabia’s capital markets have raised $274 billion, underscoring the kingdom’s dedication to financing its Vision 2030 economic transformation plan. These achievements are driven by the Capital Market Authority’s 2024-2026 strategy, which aims to enhance investment, draw global interest, and support economic diversification to fortify the financial sector.

A report by S&P Global reveals that Saudi issuers, including the government and private sector, have raised over $130 billion through US dollar-denominated issuances during this period, along with $144 billion locally in Saudi riyals. The report attributes much of this activity to the objectives of Saudi Vision 2030. While the government accounts for approximately 60% of these issuances, Vision 2030 has also opened significant opportunities in the non-oil economy and banking sector.

According to S&P, despite a rise in external debt, market conditions remain favorable, supported by lower interest rates. The agency anticipates leverage to remain manageable, with private-sector debt to GDP staying below 100% over the next 12–24 months. The current market environment favors issuers, as declining interest rates and supportive financial conditions enable ongoing capital raising. This trend is expected to continue as the kingdom progresses with large-scale projects and economic diversification initiatives.

If interest rates continue to decline, these mortgages could gain appeal for secondary market transactions. Securitizing and selling them would allow banks to offload assets from their balance sheets, freeing up capital for additional lending and investment in Vision 2030 initiatives.

According to S&P, the development of the RMBS market hinges on resolving legal challenges related to RMBS issuance or mitigating associated risks to attract interest from local and international investors. The Saudi Real Estate Refinance Company, rated A-/Positive, is anticipated to play a pivotal role in shaping this market. Additionally, direct market issuances could provide banks with a new channel for mortgage-backed securities, unlocking significant financial capacity.