Saudi Arabia’s Capital Markets Authority said on Monday it had authorized Moody’s to conduct credit rating in the country.

:: Moody’s has obtained a license to operate rating activities in Saudi Arabia, joining the two major foreign credit rating agencies Fitch and Standard & Poor’s, as the country seeks to develop its corporate debt capital markets.

Saudi Arabia’s corporate sector has traditionally relied on the bank loan market to back its funding requirements.

But since low oil prices started impacting liquidity in the local banking system, authorities have encouraged more bond issuances as bonds allow a larger investor base such as insurance and pension funds to be tapped, therefore reducing the strain on the banking system.

The sovereign itself issued its first international bond last year – a record breaking $17.5 billion issuance – to plug a budget deficit caused by lower oil prices. The bond was followed by a $9 billion international sukuk earlier this year and, this month, by the launch of a domestic sukuk program through an issuance equivalent to $4.5 billion.

CMA’s responsibility

Saudi Arabia’s Capital Markets Authority (CMA) said on Monday that as part of its responsibility to regulate and develop credit rating activities, it had authorized Moody’s Investors Service Middle East Limited to conduct credit rating in the country.

Standard & Poor’s obtained a similar license last October.

It was followed by Fitch, which obtained the same permission last April. The CMA started receiving applications to conduct credit rating in 2015.