In this post:
- On November 11, China announced intentions to offer the first dollar bond in Saudi Arabia since 2021.
- The selection of Saudi Arabia is a sign of the two countries’ growing financial ties.
- In September of this year, the Chinese Ministry of Finance issued notes worth 2 billion euros ($2.18 billion) in Paris.
With the state council’s consent, China’s Ministry of Finance announced that it will offer $2 billion in dollar-denominated bonds in Saudi Arabia the next week. The MOF of the Asian nation also stated that specifics of the issuance would be disclosed at a later date.
On November 5, China’s finance ministry declared that, with state council permission, it plans to sell $2 billion of US sovereign bonds in Riyadh. It is anticipated that the action will assist the Chinese government in opening up its financial sector to global investors.
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 to issue dollar bonds in Saudi Arabia after three years hiatus
Since 2021, China has made Saudi Arabia its preferred country for issuing dollar bonds, demonstrating the nations’ dedication to fortifying their diverse relationships. The crown prince of Saudi Arabia, Mohammed bin Salman, stated that he hopes Chinese investment would help realize his 2030 modernization program.
The goal of the drive, he continued, is to put Saudi Arabia on the international scene and lessen its reliance on oil.
In September, the prince and Chinese Premier Li Qiang co-chaired a meeting of the high-level Saudi-Chinese council.
According to reports, the parties talked about regional and global issues and assessed cooperation.
According to reports, the meeting focused on trade, energy, investment, and security and established the groundwork for improved cooperation amongst the various sectors. Ahmed al-Khateeb, the kingdom’s tourism minister, also met with Chinese officials in October to talk about growing the industry.
Wang Peng, an associate at the Bejing Academy of Social Sciences, said the issuing decision would open up new funding opportunities for the Chinese government. Additionally, the colleague conjectured that the issue would inevitably boost investor confidence in the Chinese economy, drawing in new capital.
Additionally, he stated that the sale of dollar bonds will aid investors in comprehending the nation’s financial industry.
Wang went on to say that issuing dollar bonds will increase the Asian nation’s collection of sovereign credit information.
The issuing of dollar bonds is expected to reorganize 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.
China sold bonds worth 2 billion euros in Paris in September. As of October 2024, the ministry has been issuing bonds on behalf of the Chinese government for more than 15 years, according to Yu Hong, a Chinese MOF official. According to the official, a total of $21 billion in bonds denominated in US dollars, 14 billion in bonds denominated in euros, and 373 billion yuan in treasury bonds were issued. According to reports, the first Saudi exchange-traded fund (ETF) that tracks Hong Kong equities became public on the Saudi stock exchange in October. According to reports, the listing marks a significant turning point in economic relations between Hong Kong and the Middle East.
