Amir Handjani, Columnist

Saudi Arabia's Bond Success Hides Its Financial Peril

Budget deficits are soaring. Cash reserves are dwindling. And a young population is looking for change.

November 2, 2016 at 8:00 AM UTC

Updated on

November 2, 2016 at 2:33 PM UTC

Amir Handjani is a lawyer and a consultant. He is a senior fellow at the Atlantic Council and a fellow with the Truman National Security Project.

Not gonna last forever.
Photographer: Bilal Qablan/AFP/Getty Images

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Saudi Arabia’s first-ever foray in international credit markets was undoubtedly a success. There were four times as many buyers as needed for its $17.5 billion bond issue, which surpassed all other benchmarks of previous emerging-market bond offerings. The conventional wisdom is that it validated Deputy Crown Prince Mohammad bin Salman's overarching plan to wean the kingdom of oil and move it toward more a balanced, technologically driven economy.

In truth, the bond sale was a rare bright spot in a series of economic and geopolitical missteps that have not only plunged Saudi Arabia into budgetary chaos but also weakened its grip on global oil markets. The Saudis are well aware of this -- witness the firing this week of Finance Minister Ibrahim al-Assaf despite the triumphant bond sale his ministry oversaw.