Saudi Arabia sells $20bn in bonds as banks tap international debt markets
Saudi Arabia sold $20bn worth of bonds since the start of this year, an all time-record that underscores the oil-rich kingdom’s continued appetite for debt.
The Saudi government has been the main issuer of debt, in the form of bonds, in recent years, but new data shows that Saudi companies, which are still majority state-owned, are now taking on more debt.
Bloomberg reported on Wednesday that the Saudi government has raised $11.5bn in debt since the start of the year. Meanwhile, Saudi companies have raised $8.8bn, including Saudi Electricity, Saudi Telecom, Saudi National Bank, and Riyadh Bank. All of these companies are majority-owned by the Saudi government, but also trade on the Tadawul, the kingdom’s public stock exchange.
Saudi Arabia advanced above China in 2024 as the most active issuer of international debt in emerging markets. The trend looks set to continue in 2026 as the kingdom pushes ahead with plans to diversify its economy amid tepid oil prices.
The Saudi Arabian banks’ eagerness to tap loans abroad reflects how Crown Prince Mohammed bin Salman has leaned on the financial sector to power his Vision 2030 programme.
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While mega-projects like Neom and flashy Red Sea resorts have garnered western media attention, much of Vision 2030 also rests on supporting the growth of new Saudi Arabian businesses and making home ownership more accessible for young people in a country with an average age of roughly 27.
Expanding access to homeownership and supporting real estate development is a central part of Vision 2030, and the kingdom even made it legal for foreigners to own property.
Saudi banks lending spree
Saudi Arabian banks have been at the forefront of this credit blowout, but their lending has not kept up with deposit growth. The Financial Times reported on Tuesday that the kingdom’s banks are now borrowing abroad at their fastest pace in history.
Saudi Arabia is in an enviable position that makes it an attractive option for international lenders.
It boasts foreign reserves of more than $430bn and has a debt-to-GDP ratio of just 30 percent, well below that of other emerging markets.
The International Monetary Fund raised Saudi Arabia's 2026 growth forecast to 4.5 percent on Monday, a strong number, citing its increased oil output and economic reforms supporting the non-oil sector.
Saudi Arabia is the world’s largest oil exporter.
Crude has come down from its $100 per barrel highs of a few years ago to sit at roughly $60 per barrel, but the kingdom has benefited from a change in its approach to the market.
After years of restricting supply in a bid to boost prices, Saudi Arabia is increasing production. The kingdom has one of the lowest oil production costs in the world.
Saudi Arabia is also rescaling some of its more grandiose projects that experts say were a drain on finances.
'No ego'
In November, The Financial Times reported that architects and developers were drastically downsizing "The Line", the linear city that forms the centrepiece of Neom and is the brainchild of Saudi Crown Prince Mohammed bin Salman.
Saudi Arabia has also held internal talks about finding an alternative host country for the 2029 Asian Winter Games, amid concerns that it will not meet the deadline for a futuristic ski resort.
Instead, the kingdom is pushing ahead in sectors where it has a competitive advantage, such as AI, which requires cheap electricity, and tourism, an industry the kingdom is no stranger to as the home of Mecca and Medina, the two holiest cities in the Muslim world.
For example, the kingdom is pressing ahead with a major expansion project outside the Grand Mosque in Mecca, involving the construction of tall towers near the holy site for prayer, accommodation, and hospitality.
Saudi Finance Minister Mohammed al-Jadaan said the kingdom has “absolutely no ego” to prevent it from deferring or cancelling projects that don’t make economic sense.
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