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PIF considers more global bond sales + IPOs as it looks to ramp-up pace of investment: The Public Investment Fund (PIF) is reportedly looking to add to its war chest as it aims to invest more in support of Vision 2030, Bloomberg reported, citing sources it says have knowledge of the matter.
The key: The PIF is stepping in as the Kingdom’s treasury prepares to run deficits through 2026 and pace out the implementation of some aspects of select Vision 2030 projects.
The PIF plans to ramp up annual deployment capacity to USD 70 bn a year starting 2026, fund governor Yasir Al Rumayyan said in February. This is a big step-up from its current annual spending clip of USD 40-50 bn. The PIF had liquid assets of USD 15 bn as of September, Bloomberg says, the lowest level since 2020.
No crowding out the domestic private sector: The PIF is reportedly advising its units to prioritize USD borrowing abroad so as not to put pressure on the liquidity of local banks. The move would free up local lenders to focus on financing domestic real estate projects, the sources said.
ICYMI- The PIF has raised USD 7 bn since the start of the year in two global debt sales.That includes a USD 5 bn offering that was more than 5x oversubscribed, with global institutional investors placing orders worth USD 27 bn. A USD 2 bn sukuk sale later in February was also oversubscribed. The PIF closed a USD 3.5 bn global sukuk issuance in October, two green bond offerings totaling USD 8.5 bn between 2022 and 2023, and lined up a USD 17 bn corporate facility in 2022.
Shares in PIF’s portfolio companies may soon be up for grabs as part of the sovereign wealth fund’s plan, Bloomberg’s sources claim. The PIF’s ownership in high-profile companies including Saudi Telecom (STC), Maaden, and Tadawul Group are worth over USD 170 bn. Some of those lined up for share sales by the PIF this year include leading pharma player Nupco and Saudi Global Ports.
IN OTHER FINANCING NEWS- Local lenders may need to line up some USD 11.5 bn in bonds in local and FCY to help raise funds for the economic diversification plan amid a liquidity crunch, Bloomberg reported on Friday. This would be a record high from the USD 10 bn raised in 2022. “Banks don’t have the liquidity to support the size of construction needs but they will be gathering more deposits and tapping into the international debt market,” Edmond Christou, a senior financials analyst for Bloomberg Intelligence said.
By the numbers: The Kingdom will need about USD 640 bn for construction within the next five years, Bloomberg reports, citing MEED. This means banks may have to provide some USD 384 bn during this period, funding 60% of the projects with a mix of deposits and debt.
