China to issue $2 billion of dollar bonds in Saudi Arabia

China’s Ministry of Finance disclosed that it would sell $2 billion in dollar-denominated bonds in Saudi Arabia next week upon the state council’s approval. The Asian country’s MOF also added that details of the issuance would be announced separately. 

China’s finance ministry announced on November 5 that it intends to issue $2 billion in US sovereign bonds in Riyadh following approval by the state council. The move is expected to help the Chinese government open up its financial sector to global investors. 

China to issue dollar bonds in Saudi Arabia after three years hiatus

How the BRICS de-dollarisation is going: China will issue $2 billion of dollar-denominated bonds in Saudi Arabia next week. https://t.co/J2Dvwr3yUE

— adam wolfe (@adamkwolfe) November 5, 2024

China’s decision to use Saudi Arabia as its preferred country for debt issuance in dollar bonds since 2021 illustrates the states’ commitment to strengthen their multifaceted alliances. 

Mohammed bin Salman, Saudi Arabia’s crown prince, revealed that he wants Chinese investment to facilitate his 2030 vision of modernization. He added that the drive is designed to reduce Saudi Arabia’s dependence on oil and place the state on the global stage.

The prince co-chaired a meeting of the high-level Saudi-Chinese committee in September alongside Chinese Premier Li Qiang. The parties reportedly evaluated cooperation and discussed regional and international developments.

The meeting reportedly emphasized investment, energy, trade, and security and laid the foundation for enhanced collaboration between the different sectors. 

In October, the minister of tourism, Ahmed al-Khateeb, also met with Chinese officials to discuss expanding tourism in the kingdom. 

According to Wang Peng, an associate at the Bejing Academy of Social Sciences, the issuance decision could provide the Chinese government with new avenues to raise funds. The associate also speculated the issuance was bound to increase confidence among investors in the Chinese economy, therefore attracting investments. 

He also noted the dollar bond issuance would help investors understand the country’s financial sector. Wang added the dollar bond issuance would boost the Asian country’s accumulation of sovereign credit data.

Dollar bond issuance set to restructure Saudi’s financial landscape 

Talat Hafiz, a Saudi-based economist, stated the issuance would also boost Saudi’s financial market. He emphasized that the financial development program plays a role in restructuring the Kingdom’s financial sector.

“The issuance is part of China’s efforts to strengthen the relationship between the two friendly countries, which is witnessing huge improvements in several fields.”

–Hafiz, Saudi economist

The Chinese Ministry of Finance last issued US dollar-denominated bonds in October 2022 worth $4 billion. The bonds were issued in China’s Hong Kong Special Administrative Region(HKSAR). 

In September, China issued 2 billion euros-denominated bonds in Paris. According to Yu Hong, an official at the Chinese MOF, as of October 2024, the ministry had represented the Chinese government in bond issuance for over 15 years. 

The official revealed that the cumulative issuance amounted to $21 billion in US dollar-denominated bonds, 14 billion in euro-denominated bonds, and 373 billion yuan in treasury bonds. 

The first Saudi exchange-traded fund (ETF) tracking Hong Kong stocks was reportedly listed on Saudi Arabia’s stock exchange in October. The listing is said to be a landmark step in the Middle East and Hong Kong trade relations.