Banks ’purchases in government bonds decreased by 4.6% compared to their purchases in the first half of 2019, which amounted to 46.7 billion riyals, a decrease of 2.17 billion riyals, according to a statistic prepared by“ Mubasher ”based on SAMA data.
On the level of total banks’ investments in the Kingdom in bonds (governmental and semi-governmental), they increased by 21.7% at the end of the second quarter of 2020 on an annual basis, and with an increase of 76.35 billion riyals.
The total of banks’ investments in bonds in the Kingdom reached 428.2 billion riyals at the end of the second quarter of this year, compared to their value in the corresponding period of 2019 amounting to 351.85 billion riyals.
Banks’ investments in government bonds increased by 11.6% at the end of the first half of this year and ending on June 30, compared to the total investments at the end of 2019 amounting to 383.67 billion riyals.
The purchases of Saudi banks from government bonds in the second quarter of this year amounted to 20.08 billion riyals, bringing the total investment to 4.9% compared to their value at the end of the first quarter of the year of 408.12 billion riyals.
Banks bought bonds worth 8.09 billion riyals in the month of June, up 1.9 percent from their value at the end of May, which amounted to 420.16 billion riyals.
The Saudi Ministry of Finance ended earlier receiving investors ’requests for its local issue for the month of June 2020, under the program of the Kingdom of Saudi Arabia’s government bonds in Saudi riyals, and the size of the issue was set at a total amount of 8.495 billion riyals.
Bank investments in government and semi-government bonds recorded 87.3% of total bank liabilities from the public sector in the Kingdom at the end of June.
Total liabilities increased by 20.4% at the end of last June on an annual basis, to 490.51 billion riyals, compared to 407.31 billion riyals in the same month in 2019.
Bonds are a long-term public debt instrument, used by countries to finance the budget deficit, while sovereign bonds mean that they are a debt instrument issued by the state to raise funds that they use to bridge the deficit, and that establish ownership rights for their holders in assets.
Investments in bonds include some advantages for the investor; As it is considered a tax-exempt financial instrument, and bond holders have priority over shareholders when sharing the company’s assets in the event of liquidation, and the holder of the bond has the right to request the bankruptcy of the issuing company when it is not committed to fulfill the bond service requirements, and also there are guarantees for investors that are granted by guarantors Other than the company, such as banks and financial institutions.
During the month of May, the banks operating in the Kingdom increased their investments in government bonds by about 20.2% on an annual basis, with an increase of 70.65 billion riyals over their value at the end of the corresponding month of 2019.
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