Saudi Arabia’s Public Investment Fund (PIF), the country’s sovereign wealth fund, is preparing to tap bond investors for the fourth time this year. This move is part of its strategy to finance substantial domestic investments and bolster its financial position.
Upcoming Sukuk and Green Bond Offerings
The PIF is set to market a three-year sukuk, with a benchmark size typically starting at $500 million. The initial spread is targeted at approximately 110 basis points above US Treasuries. Additionally, the fund is planning to issue a benchmark 2032 green bond, aiming for a spread of around 135 basis points above US Treasuries. Goldman Sachs Group Inc., HSBC Holdings Plc, and JPMorgan Chase & Co. are among the bookrunners handling these offerings.
Previous Fundraising Efforts
This latest fundraising effort follows a series of significant bond sales and refinancing activities by the PIF. So far this year, the fund has raised $7 billion from two dollar-denominated bond sales and £650 million ($850 million) from a sterling-denominated issue in June. Additionally, the PIF recently refinanced a $15 billion loan, further demonstrating its active role in managing and expanding its financial resources.
Boost from Saudi Aramco Stake
Earlier this year, the PIF received a substantial $164 billion stake in Saudi Aramco, the state oil giant. This move was intended to enhance the fund’s financial capacity and support its ambitious investment plans.
Strategic Role and Future Financing Needs
Chaired by Crown Prince Mohammed Bin Salman, the PIF plays a crucial role in the Saudi Vision 2030 initiative, which aims to transform the Saudi economy. The fund is expected to increase its debt sales and seek additional bank loans to meet its financing requirements. According to Morgan Stanley strategist Pascal Bode, the PIF’s 2024 financing needs are projected at $22 billion. This amount is less than what has been raised through bond sales this year, suggesting that debt will continue to be a significant component of the fund’s financial strategy going forward, especially in the absence of higher foreign direct investment (FDI) or increased oil prices.
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