Saudi Arabia wealth fund raises $17bn loan for refinancing

Saudi Arabia’s sovereign wealth fund raised a $17bn loan to repay an existing facility that’s due to mature next year.

The $620bn Public Investment Fund raised the seven-year loan from a syndicate of 25 banks in Europe, the US, the Middle East and Asia, it said in a statement.

The borrowing, which was twice oversubscribed, will be used to repay an existing $11bn loan that was raised in 2018.

The PIF, as the fund is known, has been borrowing to finance overseas acquisitions and invest in domestic projects even as soaring crude prices are set to give the kingdom its first budget surplus in almost a decade. In October, it raised $3bn from its debut green bond sale that also marked its first foray into ethical finance.

Read: Saudi Arabia’s Public Investment Fund raises $3bn via inaugural green bond

The government has said it will keep any windfall from oil in a current account and decide to allocate it between state funds such as the PIF and reserves held by the central bank at the end of the year.

“PIF will continue to explore a variety of debt funding sources as it delivers on its strategic objectives,” said Fahad Al Saif, head of global capital finance at PIF. “It is a significant achievement for PIF, raising a record-sized term facility in the longest tenor ever for a loan of its size.”

Largest ever
The loan marks the largest-ever deal for general corporate purposes raised by a borrower from the Middle East, according to Bloomberg data. It is also the second-biggest corporate loan globally this year after a $17.05bn working capital facility for Walmart.

#PIF announced today that it has secured a new USD 17 billion, seven-year senior unsecured term loan. This represents the largest self-arranged term loan ever raised for general corporate purposes.

Read more: https://t.co/ot7aRNvzzO pic.twitter.com/JrqITFBX6S

— Public Investment Fund (@PIF_en) November 30, 2022

The PIF raised an $11bn loan in 2018 from a group of lenders including Goldman Sachs Group, HSBC Holdings and JPMorgan Chase & Co. in what was its first-ever borrowing.

The loan was priced at 75 basis points over Libor, or just shy of 90 basis points including fees, Bloomberg reported at the time.

The PIF, a key lever for the kingdom’s efforts to diversify the economy away from oil, has emerged as a global investor over the past few years as it pursues the goal of increasing its assets to about $1tn by 2025. It’s funded through a mixture of borrowing, cash and asset transfers from the government, and retained earnings from its investments.