Saudi Arabia has displaced China as the most prolific issuer of international debt among emerging markets, breaking Beijing’s 12-year run at the top.
Data for new-bond sales by both governments and corporates this year reveal the kingdom is borrowing at a record pace as global debt investors begin to back Crown Prince’s Mohammed bin Salman’s Vision 2030 plan. Chinese borrowers, on the other hand, are witnessing a buying frenzy in local-currency bonds and have slowed international issuance to one of the slowest paces in recent years.
Overtaking China is meaningful for Saudi Arabia — which has 1/16th of the Asian nation’s the gross domestic product and the drive to become a global business hub by the end of the decade. The latest data suggest improving sentiment as Riyadh seeks funding for projects to diversify the economy from oil and position it as a link between Asia and Europe. Meanwhile, the rest of emerging markets are also witnessing a blockbuster year for bond issuance, amid falling borrowing costs and a hunt for juicy yields.
“Sentiment for Saudi bonds is very healthy,” said Apostolos Bantis, the Zurich-based managing director of fixed-income advisory at Union Bancaire Privee Ubp SA. “It’s not a surprise that the Kingdom has become the largest EM bond issuer given its large funding needs for large infrastructure projects.”
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