Saudi’s Public Investment Fund closes $11bn debut loan

Saudi Arabia’s Public Investment Fund said on Monday it had taken out an $11bn international syndicated loan, the first commercial borrowing by the kingdom’s top sovereign wealth fund.

“This is the first step in incorporating loans and debt instruments into PIF’s long-term funding strategy,” the fund’s managing director Yasir al-Rumayyan said in a statement.

Read: Saudi sovereign fund PIF raises $11bn loan

He added that the PIF would “develop into one of the most prominent users of banking services in the region”.

The PIF, which is to play a leading role in Saudi Arabia’s drive to develop non-oil industries, said it would use the loan for “general corporate purposes”.

The fund, with assets estimated at over $250bn, originally sought to raise between $6bn and $8bn according to sources, but Rumayyan said the size had been increased because of strong interest among banks and favourable pricing.

He did not give details of the loan, but banking sources previously said it would have a five-year maturity and be structured as a club loan, with 14 to 16 banks making commitments of up to $1bn at three different levels.

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A source with direct knowledge of the matter told Reuters last month that the PIF would pay a margin of 75 basis points over the London Interbank Offered Rate on the loan.