This post is part of an AGSIW series on Saudi Vision 2030, a sweeping set of programs and reforms adopted by the Saudi government to be implemented by 2030.
Saudi Arabia’s unprecedented bond sale to international investors raised $17.5 billion in October. The timing was impeccable. Given Donald Trump’s victory in the U.S. presidential election, markets could be bracing for several months, or more, of volatility and uncertainty. While the immediate reaction for U.S. debt issues is an expectation that Trump’s infrastructure spending promises could result in higher yields for U.S. Treasury bonds, there is also the uncertainty of his comments during the campaign that made light of possible U.S. default on debt payments. Governments rely on international bond investors to make long-term fiscal plans, and to cover short-term fiscal deficits. A government’s ability to project confidence, its reserve assets, the capacity of its business environment, and the structural reforms and policies to demonstrate a commitment to an economic vision are the essentials of debt pricing. It is never an exact science, but rather an exercise in risk analysis. Saudi Arabia accessed capital markets at a moment, just weeks ago, that now seems tranquil in comparison to the tumult the presidential election has generated.