Saudi Arabia Dominates International Bond Market, Surpassing China
In a groundbreaking development, Saudi Arabia has emerged as the top issuer of international bonds among emerging markets, outpacing China with a staggering $33.2 billion in bond sales, according to a recent report.
Shift in Leadership
For the first time in 12 years, China has been dethroned from the top spot, as Saudi Arabia experienced an 8 percent growth in bond sales this year, as reported by Bloomberg.
Vision 2030 Driving Force
The Kingdom’s rapid pace of borrowing is fueled by the increasing support from global debt investors for Saudi Arabia’s Vision 2030 plan. The plan aims to diversify the economy away from oil dependence and position the country as a global business hub by the end of the decade.
Chinese Financing Strategies Evolving
Meanwhile, Chinese borrowers are adapting their financing strategies as a surge in demand for local-currency bonds has slowed down China’s international bond issuance to one of its lowest levels in recent years.
Expert Insights
Apostolos Bantis, managing director of fixed-income advisory at Union Bancaire Privee, emphasized the positive sentiment for Saudi bonds, attributing the Kingdom’s success to its substantial funding needs for large infrastructure projects.
Small Economy, Big Impact
Despite having a much smaller economy compared to China, Saudi Arabia’s ability to attract significant international investment showcases growing confidence in its economic reforms and strategic vision.
Global Trend of Falling Borrowing Costs
The surge in bond issuance across emerging markets is reflective of a broader trend of declining borrowing costs and a strong appetite for higher yields among global investors, enabling countries like Saudi Arabia to secure funding for ambitious projects.
Addressing Fiscal Shortfall
In addition to increasing bond issuance, Saudi Arabia is exploring alternative funding sources to tackle an anticipated fiscal shortfall of around $21 billion this year, as part of efforts to accelerate the Vision 2030 initiatives.
The Kingdom’s shift towards the bond market is in response to shortfalls in foreign direct investment and constrained oil revenues due to supply cuts.