(Bloomberg) -- Saudi Arabia sold $12 billion of bonds — its largest deal since 2017 — amid a record start to a year for emerging-market countries.

The kingdom added to the almost $25 billion of bonds that developing nations had sold since the start of the year, the biggest of those being a $7.5 billion offering from Mexico. The Saudi deal is equivalent to more than half the fiscal deficit the government is projecting for this year. 

Many borrowers are seeking to lock in lower funding costs following a steep drop in US Treasury yields since October. While the Federal Reserve is widely expected to start cutting interest rates this year, pushing down yields even more, that probably won’t happen for several months.

The kingdom sold six-, 10- and 30-year notes with respective yields of 4.89%, 5.13% and 5.91%. Ten-year US Treasuries trade around 4%. 

Investors placed around $30 billion of orders, according to Saudi Arabia’s debt office. Citigroup Inc., JPMorgan Chase & Co., HSBC Holdings Plc and Standard Chartered Plc were the main banks managing the sale.

Click here for full details on the bonds

Until a few months ago, the world’s biggest oil exporter was expecting to post fiscal surpluses until at least 2025. But it’s since revised those forecasts with crude prices trading far below what it needs to balance its budget. It’s also planning to boost spending on projects championed by Crown Prince Mohammed bin Salman to diversify the economy

This month, the government estimated its total funding needs at about 86 billion riyals ($23 billion) for this year.

Many analysts have a more bearish outlook. Khatija Haque, chief economist at Emirates NBD Bank PJSC, said the Dubai lender is forecasting a budget deficit of about 4.3% of gross domestic product in 2024 and more than $46 billion of funding requirements.

Read: Bond Sales Hit Record as Emerging Markets See Year of Risks

The new bond “is probably about a quarter of what they’ll need to issue in total” from all capital markets, Haque said to Bloomberg Television. Still, the country’s stock of debt is “very low” and there’s “plenty of scope for the government to raise capital.”

--With assistance from Leigh-Ann Gerrans, Yousef Gamal El-Din and Jennifer Zabasajja.

(Updates with order book size.)

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