Saudi politics has been a staid affair for decades, but Crown Prince Mohammed bin Salman’s launch of an anti-corruption crackdown and his ratcheting up of tensions with Iran herald a period of greater uncertainty. The crackdown is likely to deal a short-term blow to the economy and, further ahead, there is a serious risk of a backlash against the crown prince that brings the Vision 2030 reforms to a grinding halt. While we think the dollar peg will remain intact, Saudi dollar bond spreads are likely to widen.
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