PIF appoints banks for its sterling debt offering

Eliot Blondet/Abaca Press via Reuters

The Public Investment Fund (PIF), Saudi Arabia’s largest sovereign wealth fund, has appointed banks to handle its new debt offering.

Barclays, BNP Paribas, HSBC and J.P. Morgan have been mandated as joint global coordinators for the sterling-denominated dual-tranche notes, fixed income news service IFR reported.

The 5-year and 15-year senior unsecured notes are part of a Euro medium term note programme, the report said, adding that bankers will commence holding investor meetings from June 3.

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No details were given on the planned amount to be raised.

The Saudi government last month raised $5 billion through a three-tranche Islamic bond (sukuk). However, the order size reached $20 billion, reflecting strong demand from investors.

Sukuk are sharia-compliant bonds developed as an alternative to conventional bonds that are not considered permissible by many Muslims.

Last month Saudi Arabia’s top economic body discussed the progress of the kingdom’s Vision 2030 plan, citing a recent government report that 87 percent of its projects are “on the right track”.

• PIF merges companies in sign of giga-project shake-up
• US treasury holdings high in Saudi Arabia’s estimation
• PIF doubles stake in Saudi Aramco to 16%

James Swanston of Capital Economics in London said the meeting shows that Saudi Arabia’s government and the PIF, which owns the giga-projects, are “seriously reconsidering the state of Vision 2030 and how much of their resources they can commit to it”.

Although it is valued at $925 billion, PIF carries the burden of funding $1.25 trillion of projects. Some of this will be alleviated by the forthcoming Aramco share sale.

The oil major aims to raise up to $13 billion by selling a 0.64 percent stake, or 1.5 billion shares, as the kingdom seeks extra funds to plug its gaping budget deficits. It secured $25.6 billion through its initial public offering in December 2019, which was the “biggest IPO in history”.