JEDDAH: In an effort to follow through with recent articles that discussed the efforts of SAGIA to lure investors from around the world, we at The KIN Consortium would like to point out that Saudi Arabian bonds are listed on the London Stock Exchange (LSE). The fact of the matter is that a range of Saudi companies have raised and continue to raise billions of dollars from the LSE. The liquidity is literally flowing from West to East in pursuit of the relatively risk averse investment opportunities found in the Kingdom - a proof that the LSE recognizes the credit worthiness of the companies in Saudi Arabia. Banks in the Kingdom are sitting on excess deposits. They have taken a defensive stance in the midst of the global financial crises by not utilizing the funds to vitalize the local economy. While other markets in both Europe and America are struggling to deal with the ongoing controversy over Basel III and the new American financial regulations, we would like to point out that they are utilizing their capital to the furthest extent. In fact the latest “stress test” showed an excess of loans to deposits in the European banks. The West continues to run excessive risks in an attempt to stabilize and vitalize their economies, while we in the Middle East conservatively restrain our local business from the working capital financing that they desperately need. The fact of the matter is both Saudi banks and Saudi companies have issued and continue to issue bonds on the London Stock Exchange. They are issuing European Medium Term Notes (EMTN), which are 5-year bonds. From our research, it seems that both HSBC and Calyon are opening this portal of liquidity to the Saudi economy. Of course these facilities are only open to the most renowned and respectable companies in the region. If one were to compare the two economies, then it would be plain to see that Islamic finance is basically “asset backed loans”, while the West is issuing loans at multiples of their asset values. The companies in the Kingdom are simply a better credit risk than the Western companies. It's our view that the revolving credit that is found on every level of the Western economies is an addiction to credit. Whether we are discussing credit cards, securitizing receivables, or any of the other loan facilities that are collateralized by the controversial credit default swaps (CDS). As a result, we at The KIN Consortium support the efforts of SAGIA in their endeavors to steer finance to the Saudi economy since it is the more conservative investment alternative. The LSE recognizes the credit worthiness of the companies in Saudi Arabia. – The writer is chairman & CEO of The KIN Consortium __
