Saudi Arabia’s financial engines are roaring this year, setting records across bond and equity markets as global capital floods in to bankroll the kingdom’s trillion-dollar transformation. Yet beneath the dazzling numbers, deep structural strains hint at a far more fragile reality.
Bond issuance has led the charge. Seventy-six transactions have already been executed this year — a 77% leap over last year’s previous high — pulling in more than US$70 billion. The government itself has raised around US$20 billion, while energy titan Saudi Aramco added another US$8 billion.
The stock market has been no less feverish. Twenty-nine IPOs have hit the Tadawul exchange this year, collectively worth about US$3.6 billion. Investor appetite borders on mania — the May listing of Flynas was oversubscribed 100 times, and Umm Al Qura’s debut in March saw demand surge 200-fold.
Even as loan volumes lag behind 2024’s highs, large-ticket financings such as the US$7 billion facility for the Public Investment Fund (PIF) have kept dealmakers busy. Bankers describe the Saudi market as the brightest spot in what began as a subdued global year for capital markets.
A Market Under Pressure
Vision 2030 — the grand blueprint to reinvent the kingdom’s oil-dependent economy — sits at the heart of this frenzy. Moody’s estimates Saudi Arabia will need roughly US$2 trillion in new investment over the next four years to stay on track.
That demand is stretching the domestic banking system thin. “The pace of the projects underway is hoovering up liquidity faster than local banks can supply,” one strategist observed, noting that lenders have increasingly turned to international borrowing to fill the gap.
Nowhere is the pressure clearer than in Neom, the ultra-futuristic city on the Red Sea whose projected cost — US$8.8 trillion — dwarfs the country’s entire annual budget many times over. As loans outpace deposits, Saudi Arabia’s dependence on international investors is deepening, reshaping its financial DNA.
Drawing the World In
To feed that capital hunger, Riyadh has struck partnerships with some of the world’s largest asset managers — from BlackRock to State Street — and tapped new funding routes, including euro and sterling bonds and green debt instruments.
Domestic innovation has followed: PIF launched a commercial paper program in June, and in August, the Saudi Real Estate Refinance Company issued the nation’s first-ever mortgage-backed security — symbolic milestones in the kingdom’s evolving market architecture.
Lofty Goals, Slow Turns
Yet progress remains uneven. The Vision 2030 roadmap once promised 150 state-owned company privatizations worth US$300 billion. Beyond the historic US$29.4 billion Aramco IPO in 2019, that pipeline has thinned dramatically.
While IPO activity has picked up again, liquidity remains a concern. Many new listings trade below their offer prices, and despite a surge in companies going public, the Tadawul’s overall market capitalization has actually declined over the past three years.
The bond market tells a similar story. Government-linked entities — chiefly PIF and Aramco — account for most corporate issuance, leaving private firms largely absent. Analysts warn that without a surge in genuine private-sector participation, Saudi Arabia risks building a market that looks busy but isn’t broad.
The Next Act
The coming months could mark a turning point. PIF, the central engine of Vision 2030, is preparing to unveil its next strategic phase — one that extends the country’s economic ambitions beyond 2040. That announcement could reignite the long-stalled privatization wave.
But time is not a luxury Saudi Arabia can afford. Oil revenues, once overflowing, have shrunk by a third from their peak. Despite its immense resources, the government has run deficits in 10 of the past 11 years and is heading toward another shortfall.
The numbers tell a story of progress — but also of urgency. To escape the gravitational pull of oil, Saudi Arabia must do more than attract capital; it must build markets deep enough to sustain an economy ready for life after crude.
