Featuring 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 June 30, 2026, SAR sukuk comprised approximately 80% of the index weight, with the remainder being USD sukuk. This composition allowed the index to closely align with the performance characteristics of the iBoxx Tadawul SAR Government Sukuk, while also benefiting from diversification through its USD components.
In Q2 2026, the Saudi Central Bank maintained its benchmark repo rate at 4.25%. In the same quarter, the iBoxx Tadawul SAR Government Sukuk posted a gain of 1.06%. Since the Saudi riyal is pegged to the U.S. dollar, both the iBoxx Tadawul SAR Government Sukuk and iBoxx Tadawul SAR Government Sukuk (USD Unhedged) exhibited similar performance.
As of June 30, 2026, there are no longer any SAR-denominated bonds in the iBoxx Tadawul SAR Government Sukuk & Bond as all the conventional bonds matured without replacement issuances from the National Debt Management Center (NDMC), resulting in a small difference with the iBoxx Tadawul SAR Government Sukuk & Bond 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.
The performance of USD-denominated securities generally 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. However, the iBoxx USD Emerging Markets Broad Saudi Arabia Sovereigns significantly outperformed U.S. Treasuries during Q2 2026, rebounding by 2.05% following a 1.40% decline in Q1 2026.
