PIF’s debt plans to ease funding strain on local banks

Reuters/Faisal Al Nasser

Saudi Arabia’s Public Investment Fund (PIF) aims to regularly tap debt markets or secure bank loans to alleviate funding pressure on local banks to fulfill the kingdom’s ambitious diversification plan.

The $940 billion sovereign fund also intends to divest stakes in its portfolio companies to bolster the economic transformation under Vision 2030, Bloomberg reported, citing informed sources.

---

---

The fund’s cash reserves dwindled to $15 billion last September, reaching its lowest level since 2020. 

This underscored the urgency to secure funding to meet its spending commitments amid the Saudi Arabian government’s prediction of deficits until 2026.

• PIF doubles stake in Saudi Aramco to 16%
• PIF enlists global banks for second debt market issue
• Saudi wealth fund becomes sponsor for ATP Tour

The fundraising efforts are important as PIF is conscious of draining excessive liquidity from the local banking system, the sources said, adding the move will allow local banks to focus on financing real estate projects in the kingdom.

Additionally, the sovereign fund plans to become a more regular issuer of bonds, setting up a yield curve as a benchmark for its subsidiaries to price their debt offerings.

PIF issued two separate bonds earlier this year to raise $7 billion.