PIF order book for new bonds issuance hits $27bn

Reuters/Ahmed Yosri

Saudi Arabia’s Public Investment Fund (PIF) has launched a triple-tranche bond sale totalling $5 billion, according to a news report.

The bond issuance has generated strong demand, with orders exceeding $27 billion, the capital markets publication IFR reported.

The final spreads for the bonds tightened from initial guidance to 115 basis points (bps) over US treasuries for the 5-year bonds, 145 bps for the 10-year bonds, and 205 bps for the 30-year offering.

Citi, Goldman Sachs International and J.P. Morgan were joint global coordinators for the bond offering, the report said.

The sovereign wealth fund has nearly $718 billion in assets under management as of September 30, 2023.

In the latest spree of loan arrangements, Saudi Arabia sold $12 billion of bonds in a three-part issuance that was heavily oversubscribed. In December, the finance ministry concluded an $11 billion syndicated loan that was 2023’s largest worldwide. 

Finance minister Mohammed Al Jadaan recently approved a borrowing plan that estimated the financing needs at SAR86 billion ($22.93 billion) for 2024.

The plan aims to address the budget deficit, which is forecasted to be SAR79 billion this year due to lower crude output and reduced revenue amid falling prices.

The PIF had $85 billion in loans and borrowings at the end of 2022, a 30 percent increase from the previous year. 

Saudi government debt has risen steadily since 2014, reaching an all-time high of $264 billion by the end of 2022, equivalent to 23 percent of GDP as of March 2023. 

Foreign exchange reserves have also declined steadily since 2015 to $414.8 billion in September 2023.