Saudi Arabia surpasses China for the first time as the largest issuer of international bonds among emerging markets, within 5 months.
I figured out Kingdom of Saudi Arabia, as the largest issuer of international bonds among emerging markets, overtaking China with $33.2 billion in bond sales so far, according to a new report.
This is the first time in 12 years she has been away China, from first place, thanks to the growth in Saudi bond sales by 8% this year, according to Bloomberg.
Reasons for increasing Saudi Arabia’s issuance of international bonds
The record pace of borrowing returnsThe kingdom, to increase support from global debt investors for the “Kingdom’s Vision 2030” plan, which aims to diversify the Saudi economy away from dependence on oil, and transform the country into a global business center by the end of the decade.
In contrast, Chinese borrowers are witnessing a major shift in their financing strategies, and the rise in demand for local currency bonds has slowed China’s issuance of international bonds to one of its lowest levels in recent years.
Sentiment towards the Kingdom’s bonds is very healthy
“Sentiment towards Saudi bonds is very healthy,” said Apostolos Pantis, managing director of fixed income consulting at Union Banker Privy.
He added: “It is not surprising that…The kingdom “It is the largest issuer of bonds in emerging markets due to its large financing needs for large infrastructure projects.”
A certificate of confidence in the Kingdom’s Vision 2030
The Kingdom’s rise is a particularly notable phenomenon given its relatively smaller economy compared to China.
Although the Kingdom’s gross domestic product does not exceed 1/16 of the size of China’s gross domestic product, the Kingdom’s ability to attract large international investments is a testimony to the growing confidence in its economic reforms and strategic vision.
The surge in bond issuance in emerging markets reflects a broader trend of lower borrowing costs and a strong appetite for higher returns among global investors.
This favorable environment enables countries like the Kingdom to secure financing for ambitious projects aimed at economic diversification and enhancing global connectivity.
The Kingdom is seeking alternative funding sources
The report stated that in addition to enhancing bond issuance, the Kingdom is actively seeking alternative financing sources to address the expected financial deficit of approximately $21 billion this year.
The Kingdom expects its total financing activities for this year to reach about $37 billion to help accelerate Vision 2030 initiatives.
The Kingdom’s major shift toward the bond market is partly due to a response to a shortage in foreign direct investment and restricted oil revenues due to supply cuts.
