Introducing the iBoxx Tadawul Government & Agencies Sukuk Index (SAR Unhedged)
The iBoxx Tadawul Government & Agencies Sukuk Index (SAR Unhedged) was launched on May 6, 2025, and it measures the performance of SAR-denominated government sukuk and USD-denominated government and agencies sukuk. The index reflects Shariah-compliant fixed income securities issued by government and agency issuers domestically and internationally. Notably, as of Sept. 30, 2025, approximately 80% of the index weight comprised of SAR sukuk, with the remainder being USD sukuk. This composition allows 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 components.
In Q3 2025, the Saudi Central Bank lowered their repo rate by 25 bps to 4.75%. In the same quarter, the iBoxx Tadawul SAR Government Sukuk Index posted a gain of 1.10%. 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.
As of Sept. 30, 2025, SAR-denominated bonds made up less than 2% of the iBoxx Tadawul SAR Government Sukuk & Bond Index, resulting in a small difference in overall index performance.
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. USD-denominated bonds and sukuk from Saudi Arabia are tracked by the iBoxx USD Emerging Markets Broad Saudi Arabia Sovereigns Index.
The performance of USD-denominated securities resembled that of U.S. Treasuries compared to 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.
