Saudi Arabia has concluded the largest-ever emerging market bond sale, raising $17.5bn in its debut international debt offering as it seeks to plug the budget deficit and fund its economic transformation plan.

The issue surpassed the previous emerging market sovereign bond record sale of $16.5bn by Argentina in April. The offer racked up orders worth $67bn, almost four times the amount raised. Investor interest in the kingdom’s debt is far larger than many market participants had expected.

Riyadh managed to price the bond cheaper than the market expectations. The pricing tightened to approximately 140 basis points (bps) over treasuries for the five-year tranche, 170 bps for the 10-year and 215 bps for the thirty-year paper after the order book swelled. It managed to pull it further down and launched $5.5bn five-year tranche 135 bps, the $5.5bn 10-year tranche at 165 bps over, and a $6.5bn 30-year tranche at 210 bps over.

When Qatar, which is rated higher than Saudi Arabia by credit rating agencies, issued $9bn of bonds in May, it sold the debt at 120 bps over treasuries for a five-year tranche, 150 bps over for 10-year paper and 210 bps over for a 30-year tranche.

Earlier reports indicated that Saudi Arabia would issue $10bn to 15bn of bonds, priced at 160, 185 and 235 bps over Treasuries for the respective tranches.

The kingdom had hired US’ Citigroup and JPMorgan Chase, and the UK’s HSBC Holdings as global coordinators, and had engaged seven other managers from Japan and China to Germany and France for the deal.

London-based Capital Economics estimates that the bond issue would finance around a third of Saudi Arabia’s next year budget deficit and almost all of the kingdom’s current account gap, meaning its foreign exchange reserves were unlikely to fall much further in coming years.

Saudi Arabia is expected to run a 13 per cent of GDP fiscal deficit in 2016, and 9.5 per cent in 2017, according to IMF figures. So far, Saudi Arabia has financed its deficit by drawing down on foreign reserves by more than $170bn over the past two years, and issuing billion of riyals of domestic debt. It tapped the international loan market earlier this year with a $10bn syndicated facility.

Gross government debt will rise from 5 per cent of GDP in 2015 to 19.9 per cent in 2017, the IMF predicts. US-based Standard & Poor’s expects the kingdom to borrow as much as $180bn by 2019.

The bond sale was also helped by a rebound of oil prices above $50 a barrel in recent weeks from around $30 early this year, after Saudi Arabia changed course and decided to support output cuts by OPEC. It had refused to do this for two years in order to win market share back from U.S. shale producers.

The Saudi issue is expected to set a benchmark for the kingdom and pave the way for further international issues by the government in coming years, as well as bond sales by a string of big Saudi companies.