Saudi Arabia tests bond market appetite with new dollar deal

The '2030 Vision' logo in Dhahran, Saudi Arabia. (Bloomberg image)

• Saudi Arabia plans to issue dollar bonds with maturities from 3 to 30 years
• Bond proceeds will fund major projects to diversify the economy from oil
• Goldman Sachs forecasts Saudi Arabia may issue $25 billion in debt in 2023

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Saudi Arabia is starting 2026 with a benchmark-sized dollar bond, showing no let up in international borrowing to help fund huge projects meant to diversify the economy from oil.

The kingdom plans to sell notes with maturities ranging from three to 30 years, according to a person familiar with the matter. The final terms, including the size and the yields, may be announced later on Monday.

Initial spread talk is around 95 basis points over US Treasuries for the shortest tranche and about 140 basis points for the longer one, said the person, who asked not to be identified sharing private information. The kingdom is also selling five- and 10-year tranches.

Earlier this month, the Ministry of Finance approved borrowing plans that imply about $14 billion to $20 billion of issuance in international bond markets this year. At the upper end, that would be broadly in line with 2025, while the lower end would mark the smallest amount since 2022.

Still, Saudi Arabia has a history of overshooting its funding targets. Goldman Sachs Group Inc. has predicted the Saudis will issue a record $25 billion of international debt this year, and sees the country’s fiscal deficit being 6% of gross domestic product, far higher than the government’s target of 3.3%.

Saudi Arabia’s Ministry of Finance closed a $13 billion dollar loan late last year. The proceeds will be used for infrastructure projects and the facility carries a seven-year tenor. The loan was heavily marketed to Chinese banks, according to people familiar with the matter.

The loan deal was the latest in a series of transactions that have seen Saudi Arabia tap the Asian market for liquidity to diversify its funding sources. Asian banks are keen to lend amid a shortage of transactions at home. Loan volumes in Asia, excluding Japan, in dollars, euros and yen fell to a five-year low in 2025, according to data compiled by Bloomberg.