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Investors have been unloading bonds from Saudi Arabia and other Gulf states since a surprise OPEC+ production cut on the weekend sent the price of oil surging, an unusual move that traders say reflects how expensive the region’s debt has become.
Dollar bonds issued by governments in the region were among the biggest losers in emerging markets Monday, even amid sharp gains in oil. Most of the securities remained under pressure on Tuesday, with Saudi Arabia’s note due in 2025 the biggest loser in emerging markets and headed for a record decline.
It was unclear who was selling or why. Increases in the price of oil would typically be expected to boost demand for energy exporters’ debt.
But bonds from Saudi Arabia accounted for three of the top 10 losers in the developing world when markets opened on Monday, while notes from the United Arab Emirates and Qatar also fell. Saudi Arabia’s bond due 2027 fell by a record, with the yield rising 1.6 percentage points to 4.2% at the close.
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