Introducing the iBoxx Tadawul Government & Agencies Sukuk Index (SAR Unhedged)
The iBoxx Tadawul Government & Agencies Sukuk Index (SAR Unhedged) was launched May 6, 2025, and it measures the market-value-weighted performance of SAR-denominated government sukuk and USD-denominated government and agencies sukuk. The combined index reflects Shariah-compliant fixed income securities issued by government and agency issuers domestically and internationally. Notably, as of June 30, 2025, over 82% of the index weight comprised SAR sukuk, with the remainder being USD sukuk. This composition helps the index to closely align with the performance characteristics of the iBoxx Tadawul SAR Government Sukuk Index, while also benefiting from diversification through its USD sukuk constituents.
In Q2 2025, the iBoxx Tadawul SAR Government Sukuk Index posted a gain of 0.92% despite volatility in the oil market following the escalation of the war between Israel and Iran. Since the Saudi riyal is pegged to the U.S. dollar, the local currency and USD-unhedged versions of the iBoxx Tadawul SAR Government Sukuk Index exhibited similar performance due to the negligible currency fluctuations.
As of June 30, 2025, SAR-denominated bonds made up less than 2% of the iBoxx Tadawul SAR Government Sukuk & Bond Index, resulting in a small impact on overall index performance when compared to the sukuk-only index.
The Kingdom of Saudi Arabia diversifies its debt portfolio between domestic and international financing, with USD-denominated debt being the primary source of international issuances. The iBoxx USD Emerging Markets Broad Saudi Arabia Sovereigns Index tracks the performance of USD-denominated government sukuk and bonds.
The performance of USD-denominated securities resembles that of U.S. Treasuries more closely than the other indices shown in Exhibit 2. This similarity stems from the USD-denominated debt interest rate curve reflecting the prevailing U.S. Treasuries interest curve.
