Saudi Arabia has eclipsed China as the top emerging-market borrower, ending China’s 12-year dominance in international debt issuance. According to recent data, Saudi Arabia has accelerated its global borrowing efforts, setting a new record pace, while Chinese borrowers have slowed their international issuance to a five-year low.
The kingdom’s increased borrowing is largely driven by its ambitious Vision 2030 plan, spearheaded by Crown Prince Mohammed bin Salman. The plan aims to diversify the country’s economy, reduce its reliance on oil exports, and develop various sectors such as tourism, technology, and renewable energy. To finance these initiatives, Saudi Arabia has been actively issuing international bonds, attracting global debt investors seeking higher yields.
In contrast, Chinese borrowers have been focusing on the domestic market, capitalizing on a buying frenzy in local-currency bonds. This shift in strategy has resulted in a significant decline in international bond issuance, with sales plummeting 68% below the five-year average.
Key Statistics:
- – Saudi Arabia’s international bond sales have reached a record high this year.
- – China’s international bond issuance has slowed to a five-year low.
- – Chinese local-currency bond sales have surged, driving a buying frenzy in the domestic market.
Expert Insights:
“The kingdom’s aggressive borrowing strategy is a clear indication of its commitment to Vision 2030,” said a leading economist. “Saudi Arabia is leveraging its strong credit ratings and attractive yields to secure funding for its ambitious development plans.”
“The slowdown in Chinese international issuance is a deliberate move to prioritize domestic funding sources,” added another expert. “China is focusing on developing its local bond market, reducing its reliance on foreign capital.”
Market Implications:
The shift in borrowing dynamics between Saudi Arabia and China has significant implications for the global debt market. As Saudi Arabia continues to issue debt at a record pace, investors are likely to benefit from higher yields and increased diversification opportunities. Conversely, China’s reduced international issuance may lead to a decrease in global liquidity and potentially impact emerging-market borrowing costs.
In Essence:
Saudi Arabia’s surge in international borrowing has dethroned China as the top emerging-market borrower, marking a significant shift in global debt market dynamics. As the kingdom drives forward with its Vision 2030 plan, its increased borrowing is expected to have far-reaching implications for investors, emerging markets, and the global economy.
