Saudi Arabia’s SAR-denominated sovereign sukuk is set to become part of JP Morgan’s emerging markets government bond (GBI-EM) global diversified index and Bloomberg’s EM local currency government index.
A total of eight sukuk are expected to be included, weighted at 2.52% of the GBI-EM. Phased implementation is scheduled to begin from 29 January 2027.
It will also be added to the ESG-focused Screened Tilted and Reweighted (JSTAR) index in band four, with a 1.96% weighting. Bands are used to scale each issue’s baseline index market value.
The decision has been made following local reforms designed to improve international investor access and domestic trading capabilities, JP Morgan said.
The Saudi Arabia SAR standalone index has grown from 22 instruments valued at US$59 billion to 37 instruments measuring US$175 billion since its launch in 2023.
“[This has helped to] increase the market’s awareness of Saudi Arabia as a steady local-currency debt issuer,” the firm stated, adding that liquidity has benefited from the development of benchmark tenors and the launch of several Saudi debt-focused ETFs in 2025.
“Nominal trading volumes have increased in SAR terms, with a 2x increase in the number of trades executed locally on the Saudi Exchange, when compared against the same year-to-date period last year,” it added, based on Tadawul Group reporting as of March 2026.
The Philippines is also being added to the index, with a 1.78% weighting. A total of nine bonds are eligible for inclusion, with a combined notional value of US$49 billion.
It will enter the JSTAR induced at Band 3, with a 2.07% weighting.
The country has been included following market access initiatives locally and continued international investor activity. As of December 2025, foreign ownership in the country was at 4.8% and international participation in local bond auctions was increasing.
As a result of the inclusions, country weight caps for those in the diversified GBI-EM will be reduced from 10% to 9%. China, India, Mexico, Malaysia and Indonesia will move to this new cap.
Commenting on the changes, the Saudi Ministry of Finance (MoF) stated, “[This] reflects the continuous efforts led by the Kingdom within the targets of the Financial Sector Development Program — one of the programs of Saudi Vision 2030 — to deepen the capital market, broaden the investor base, and enhance the efficiency of government financing instruments.”
Bloomberg has also announced that Saudi Arabia government bonds would be included in its EM local currency government index, following a January consultation.
Similarly to JP Morgan, Bloomberg pointed to increased participation from global investors, a growing market and successful reforms as factors leading to the bonds’ inclusion. The 37 eligible bonds have a minimum remaining maturity of a year, and a minimum outstanding of 1 billion Saudi riyal.
It also noted that the depth and consistency of secondary market liquidity was raised as a concern by some participants. However, according to trading volumes from Saudi Tadawul, market activity has increased relative to recent years.
Nick Gendron, global fixed income index product at Bloomberg Index Services Limited, commented, “Saudi Arabia’s inclusion reflects the significant progress in developing its local debt market, including enhancements to trading infrastructure, broader investor participation, and ongoing market reforms. These advancements are helping to deepen the Kingdom’s capital markets, broaden the investor base, and enhance the efficiency of government financing instruments.”
Changes to the index are expected to be effective following the end-April 2027 index rebalancing, with a potential phase-in. A Bloomberg EM Local Currency Government Index including Saudi Arabia is expected to be published in Q3 2026.
Saudi Arabia will be the 11th largest component of the index, with a 1.9% market share.
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