https://arab.news/c2ckc
RIYADH: Saudi Arabia’s sovereign wealth fund is preparing to issue a benchmark-sized three-year sukuk and a green bond maturing in 2032, Reuters reported, citing bank documents.
The report said that three-year sukuk is priced between 80 and 85 basis points above the US Treasury bonds, while the green note stands at 135 bps.
Benchmark size typically refers to at least $500 million.
The proceeds from the sukuk sale will be directed toward the general purposes of the fund, while the green bond sale will be used for eligible projects, the release added.
Goldman Sachs, HSBC Holdings and JPMorgan Chase & Co. are among the bookrunners.
This will mark the fourth time the Public Investment Fund has tapped the bond market to support its major investment plans, including the development of giga-projects in the Kingdom.
In 2023, PIF raised $7 billion through two dollar bond sales and an additional $850 million from a sterling-denominated issue.
In August, the fund also obtained a $15 billion revolving credit facility for general corporate purposes from a diverse global syndicate of 23 financial institutions from Europe, the US, the Middle East, and Asia.
In a statement, PIF said that this credit facility is offered for an initial period of three years, and is extendable for up to two additional years.
The fund added that this credit facility will replace the previous revolving arrangement agreed on in 2021.
Loans and debt instruments represent one of PIF’s four sources of funding. The other three are capital injections from governments, state assets transferred to PIF, and retained earnings from investments.
The fund is currently spearheading the economic diversification efforts of Saudi Arabia, as the Kingdom is steadily reducing its decades-long dependence on oil.
Since 2017, PIF has established 95 companies and injected at least SR150 billion ($39.97 billion) into the local economy annually.
In July, a report released by KPMG noted that the total revenue of PIF climbed by more than 100 percent year-on-year in 2023 to reach SR331 billion.
The financial results also affirmed PIF’s robust position, earning an A1 rating from Moody’s with a positive outlook and an A+ standing from Fitch with a stable outlook.