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Saudi Arabia’s PIF starts selling debut green bonds

Person, Human, Clothing REUTERS/Ahmed Yosri
PIF has raised tens of billions, including a $17 billion loan in November, to fund an investment programme to create new industries and jobs

Saudi Arabia’s Public Investment Fund (PIF) has begun taking orders for its debut bond sale, in what will be the first green issuance by a sovereign wealth fund.

A bank document has revealed initial price guidance for the green bonds at around 150 basis points over US Treasuries for a five-year portion, around 190 basis points over US Treasuries for 10 years and around 7 per cent to 7.25 per cent for 100 years.

The five-year and 10-year tranches are expected to be a typical benchmark size of at least $500 million.

Books have opened and the deal – predicted to raise billions of dollars – is expected to close later on Wednesday.

PIF, which manages more than $600 billion in assets, is at the centre of Saudi Arabia’s ambitious agenda to diversify its economy away from oil, spearheaded by Saudi Crown Prince Mohammed bin Salman.

The crown prince, Saudi Arabia’s de facto ruler, said in December that PIF would invest about $40 billion domestically in 2022 after spending roughly $22 billion in 2021.

The fund aims to grow its assets to more than $1 trillion by 2025 and expects to invest more than $10 billion by 2026 in eligible green projects. These include renewable energy, clean transport and sustainable water management.

BNP Paribas, Citi, Deutsche Bank, Goldman Sachs and JPMorgan are joint global coordinators and active bookrunners on the deal. Eight other banks are also active bookrunners and 11 more are also on the deal.