Saudi Arabia's PIF Concludes $5B Bond Offering

Saudi Arabia's PIF Concludes $5B Bond Offering

Saudi sovereign wealth fund Public Investment Fund (PIF) has closed a $5 billion Regulation-S bond offering after finalizing its pricing as part of its established Euro Medium-Term Note Program.

Bond offering

The US dollar-denominated offering was more than five times oversubscribed, with order books touching as high as $27 billion.

The offering consisted of three tranches: two $1.75 billion tranches with coupons maturing in 2029 and 2034, respectively, and a smaller $1.5 billion tranche with a longer maturity date extending to 2054.

The PIF is the primary investment vehicle of the Gulf state to advance an economic diversification program aimed at reducing reliance on fossil revenues.

The sovereign fund's primary funding sources include loans, debt instruments, retained earnings from investments, government capital injections, and government asset transfers. The fund is rated A1 with a positive outlook from Moody's and an A+ rating with a stable outlook from Fitch.

The PIF has raised tens of billions of dollars to support an extensive investment program to develop new industries, generate employment opportunities, and develop the planned futuristic city, NEOM.

Recent deals, offerings

In November last year, the PIF secured a financing agreement of a syndicated loan worth up to $5 billion from a consortium of nine leading international banks, fully backed by the state-run Korea Trade Insurance Corporation (K-SURE).

The financing agreement has a 13-year tenor, initially worth $3 billion, with the option to increase to $5 billion, marking PIF's first financing covered by an export credit agency as part of its funding diversification efforts.

This agreement came on the heels of PIF's international sukuk issuance of $3.5 billion in October, two green bond issuances totaling $8.5 billion—including the first-ever century green bond and the first-ever green bond issued by a sovereign wealth fund—and a $17 billion corporate loan in 2022.

PIF dominates

In 2023, the PIF outpaced other sovereign wealth funds globally by leading in spending with $31.6 billion deployed in 49 deals, a 33% increase from 2022.

Sovereign wealth fund investments worldwide declined by 20% year-on-year to $124.7 billion in 324 transactions, according to the Global SWF's 2024 Annual Report.

Big number

$776.7 billion. This is the estimated value of PIF's assets under management (AUM), according to the Sovereign Wealth Fund Institute (SWFI), which also ranked PIF as the world's sixth largest sovereign wealth fund by total assets.