Saudi Arabia leads emerging markets in bond issuance, surpassing China

Saudi Arabia has emerged as the top issuer of international bonds among emerging markets, surpassing China with $33.2 billion in bond sales to date, according to a new report.

This marks the first time in 12 years that China has been displaced from the top spot, thanks to an 8 percent growth in Saudi Arabia’s bond sales this year, Bloomberg reported.

The Kingdom’s record pace of borrowing is driven by increasing support from global debt investors for the nation’s Vision 2030 plan which aims to diversify the Saudi economy away from oil dependence and transform the country into a global business hub by the end of the decade.

In contrast, Chinese borrowers are experiencing a significant shift in their financing strategies. A surge in demand for local-currency bonds has slowed China’s international bond issuance to one of its lowest levels in recent years.

“Sentiment for Saudi bonds is very healthy,” Apostolos Bantis, managing director of fixed-income advisory at Union Bancaire Privee, told Bloomberg.

“It’s not a surprise that the Kingdom has become the largest EM bond issuer given its large funding needs for large infrastructure projects,” he added.

Saudi Arabia’s ascent is particularly notable given its relatively smaller economy compared to China.

With a gross domestic product only 1/16th the size of China’s, the Kingdom’s ability to attract substantial international investment is a testament to the growing confidence in its economic reforms and strategic vision.

The surge in bond issuance across emerging markets reflects a broader trend of falling borrowing costs and a robust appetite for higher yields among global investors.

This favorable environment is enabling countries like Saudi Arabia to secure funding for ambitious projects aimed at economic diversification and enhanced global connectivity.

In addition to boosting its bond issuance, Saudi Arabia is actively seeking alternative sources of funding to address an anticipated fiscal shortfall of approximately $21 billion this year, the report stated.

The Kingdom expects its total funding activities for the year to reach around $37 billion to help accelerate the Vision 2030 initiatives.

The substantial turn to the bond market is partly a response to shortfalls in foreign direct investment and constrained oil revenues due to supply cuts.