By ziad Hamdi

Saudi Arabia’s bond market just hit a major milestone, and it is generating quite a buzz. In June 2025, the kingdom’s debt market saw its first full month of over the counter trading for sovereign riyal bonds, totaling 2 billion riyals, roughly $533 million. According to the Saudi Tadawul Group, which runs the kingdom’s stock exchange, this is a significant step forward for a country working to make its financial markets a global attraction. It is all part of Saudi Arabia’s broader plan to diversify its economy and reduce dependence on oil, and it is exciting to see it start to come together.

The concept behind over the counter trading is straightforward but impactful: it allows investors to trade bonds directly, bypassing the usual exchange system. It is like dealing directly with someone to make things quicker and more flexible. For Saudi Arabia, this is a huge leap toward making its debt market more liquid and appealing, particularly to foreign investors who have been cautious about getting involved. The kingdom is investing heavily in Vision 2030, with massive projects like Neom and Qiddiya, and they need substantial funding. This $533 million in trades is a clear sign that investors are starting to show interest.

Saudi Arabia has been borrowing heavily recently. In 2024, the government and its entities, like the Public Investment Fund, issued around $50 billion in bonds, making the kingdom one of the largest players in emerging market debt. That is a big deal, but it also highlights the financial pressure they are under. With oil prices at about $71 per barrel last year, well below the $96.2 the International Monetary Fund says they need to balance their budget, Saudi Arabia is relying heavily on its debt market to keep things running and fund those ambitious projects. The over the counter trading system is a way to keep that momentum going, giving investors an easier way to buy into Saudi bonds.

Foreign investment is a critical part of the equation. The kingdom has ambitious goals for foreign direct investment, targeting $29 billion annually, but they only reached $9.7 billion in the first half of 2024. That is a challenge. Still, initiatives like this over the counter trading platform and the Public Investment Fund’s recent $200 million investment in a European exchange traded fund tracking Saudi debt show they are committed to opening up to the world. Some people are suggesting this could position Saudi Arabia as a leading hub for bond trading in the Middle East, perhaps even challenging Dubai. That is an ambitious goal, but it is not impossible.

Of course, there are hurdles. The kingdom’s debt is growing quickly, reaching $308.7 billion by September 2024, and those big Vision 2030 projects are expensive. We are talking about $640 billion in construction spending over the next five years. Saudi banks are feeling the strain too, with plans to issue at least $11.5 billion in bonds annually to keep up. Additionally, there are challenges in encouraging Saudis to take on certain jobs and reducing reliance on foreign workers, which complicates efforts to diversify the economy. It is a lot to manage, and the stakes are high.

Still, there is something thrilling about watching Saudi Arabia push these boundaries. The $533 million in over the counter trades is just the beginning, but it is a strong start. As the kingdom prepares for the Future Investment Initiative in 2025, global investors will be watching closely to see if Saudi Arabia can turn these financial achievements into lasting economic progress. For now, this feels like a moment where the kingdom is saying, “We are open for business, and we are serious about it.”