Saudi wealth fund edges closer to green bond with Moody’s rating

Saudi Arabia’s sovereign wealth fund has received the fifth-highest credit rating from Moody’s Investors Service ahead of its plans to tap the international bond market for the first time.

The A1 rating for the $500bn Public Investment Fund, which matches the agency’s sovereign rating on Saudi Arabia, “reflects its standalone creditworthiness” as well as its “very high level of interdependence” with the government and likelihood that the state would provide it with support if needed, Moody’s said in a statement on Monday.

While the fund has “indirect” exposure to environmental and social risks, its “portfolio is quite diversified and many of the sectors where PIF invests have low exposure to environmental and social risks,” Moody’s said.

The first-time rating is a further indication that the wealth fund is closing in on plans to sell its debut green bond as it looks to increase the role that environmental, social and governance principles play in its investments. Governor Yasir Al-Rumayyan said in September that the PIF was working on plans to issue a so-called green bond.

Moody’s rating “will further enhance our access to international capital markets and continue to diversify our sources of funding,” Al-Rumayyan said in a statement.

Last week Fitch Ratings gave the fund a rating of A, the sixth-highest investment-grade level, with a stable outlook – also the same grade it assigns for Saudi Arabia’s government. The fund plays a key role in Crown Prince Mohammed bin Salman’s plans to diversify the economy of the world’s largest crude exporter.

Fitch estimates that government cash injections to the fund over the past three years totaled $77bn.

“The government has an oversight over PIF, notably over its investment and funding strategies through its board of directors, which is chaired by the Crown Prince and governed by appointed Ministries and government officials,” the rating company said in a statement.