Saudi Wealth Fund Taps Bond Market for Fourth Time This Year
(Bloomberg) -- Saudi Arabia’s sovereign wealth fund tapped bond investors for the fourth time this year as it looks to finance its huge domestic investment plans.
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The Public Investment Fund sold a three-year sukuk in a $1.5 billion size, according to people familiar with the matter. The spread was tightened to 75 basis points over US Treasuries from an initial target of around 110 basis points. Demand was over $4.7 billion, the people said.
The PIF, as the fund is known, also sold a $500 million increase of a 2032 green bond at a spread of 107 basis points above US Treasuries, the people said, asking not to be identified as the information is private. Bids for the note exceeded $3.4 billion.
Goldman Sachs Group Inc., HSBC Holdings Plc and JPMorgan Chase & Co. were among the bookrunners.
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The wealth fund’s latest fundraising marks a busy period of borrowing as it juggles a commitment to ramp up domestic investments with how to finance those plans. It has already raised $7 billion from two dollar bond sales this year, plus an additional £650 million ($850 million) from a sterling denominated issue in June. Subsequently, the PIF refinanced a $15 billion loan.
Earlier this year, the fund received an additional $164 billion stake in oil giant Saudi Aramco to help boost its finances.
The PIF, chaired by Crown Prince Mohammed Bin Salman, is a key part of his plans to reshape the Saudi economy. The fund was likely to accelerate debt sales and seek new bank loans as part of plans to raise cash, Bloomberg reported in March.
The wealth fund’s 2024 financing needs stand at $22 billion, Morgan Stanley strategist Pascal Bode wrote in a research report on Tuesday. That’s less than half of what has been raised through bond sales this year. “Debt is likely to feature even more prominently going forward absent higher FDI or oil prices,” he said.
--With assistance from Christine Burke and Olga Voitova.
(Updates to show deal has priced.)
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