PIF-backed AviLease plans USD-denominated bond offering

Good morning, friends. The government’s stake in Saudi Arabia’s largest contractor turns out to be bigger than anyone reported. Combined state control of Binladin International Holding Group now sits above 92% — well past the 86% on record since December’s restructuring — with the founding family left holding less than 8%, a company spokesperson tells us.

Two reads on the wider economy this morning: Industrial output rose 5.1% last year, reversing two straight years of contraction — but dig into the composition and the recovery looks narrower than the headline. Asset managers, meanwhile, had a clean war — AUM topped USD 340 bn by the end of 1Q, up 17% y-o-y, now worth about a quarter of GDP. Fitch sees it surpassing USD 400 bn by next year.

AviLease lines up USD notes

PIF-backed AviLease is planning a five-year USD-denominated Regulation S bond offering, kicking off investor calls today, Zawya reports. The notes are expected to list on the London Stock Exchange’s International Securities Market, rated Baa2 by Moody’s and BBB by Fitch.

The new issuance continues a pattern: AviLease is funding its expansion through its own balance sheet rather than drawing on the PIF directly, consistent with the sovereign fund’s push to build certain portfolio companies, including AviLease, into self-financing, internationally competitive businesses that attract more foreign direct investment.

REMEMBER- The aircraft lessor has been ramping up its exposure to debt instruments over the past months, pricing a USD 850 mn offering of senior unsecured notes due November 2030 under its Global Medium Term Note Program.

ADVISORS- AviLease appointed BNP Paribas and Mizuho as joint global coordinators, bookrunners, and lead managers for the offering, alongside Credit Agricole CIB, Emirates NBD Capital, HSBC, JP Morgan, and Morgan Stanley as joint bookrunners and lead managers.

Sama reallocating?

The Saudi Central Bank (Sama) reportedly pulled bns in USD from at least two global asset managers in recent months, Bloomberg reports, citing unnamed sources. The bank reallocated some of the money from passive index-tracking funds in favor of higher-performing strategies, including fixed income products, according to the sources.

Why? Sama’s core mandate is capital preservation and defending the SAR-USD peg. That defensive buffer was facing unique domestic structural pressures with the growing demand for liquidity amid the kingdom’s diversification agenda, despite robust oil revenues.

REMEMBER- Easy liquidity in Saudi banking was hitting a wall even before the war, with a projected loan-to-deposit ratio reaching higher levels in 2026 than the 113% recorded in November, which led some banks like the Saudi National Bank to explore significant risk transfer transactions to unlock capital for more lending.

Private ventures in public parks?

Public parks may soon be fair game for 12 commercial activities under a new proposal by the Municipalities and Housing Ministry, the Saudi Gazette reports. If passed, we could see smaller parks — over 1.2k sqm — house cafes, ice cream and juice shops, and florists, and parks covering more than 5k sqm could host gyms, childcare centers, entertainment centers, and more.

Some rules: To be eligible for these business ventures, which scale in scope based on park size, the green spaces must not directly overlook residential streets. The parks themselves must overlook a street with a minimum width of 15 meters.

Green spaces are becoming increasingly tied to the private sector. Along with the National Center for Privatization & PPP, the ministry recently started scoping out private players to undertake the rehabilitation, operation, and maintenance of 50 public parks.

A new platform for Umrah

Wego Umrah is now live: The Hajj and Umrah Ministry and travel app Wego have launched an integrated Umrah bookings platform covering flights, hotels, licensed ground transport, and visa request facilitation across three service tiers, according to a press release.

Who’s doing what? Wego handles distribution, sales, marketing, and customer transactions, while licensed Umrah service providers manage on-ground operation, and visa issuance stays with Saudi regulators, with the ministry overseeing compliance and service quality.

Data point

2.6% — that’s how much the Construction Cost Index (CCI) rose y-o-y in May — the highest rise since Gastat began collecting the data in January 2024, according to a Gastat report (pdf). Non-residential costs led with a 3% y-o-y increase, and residential costs were up 2.5%, driven by sharp increases in equipment and machinery rental, labor, and energy costs. On a m-o-m basis, overall costs ticked up 0.2%.

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The big story abroad

There appears to be some headway on the US-Iran front, as Washington temporarily authorizes Tehran to sell oil in USD for two months — a move US Vice President JD Vance noted coincides with Iran's agreement to grant inspectors access to its nuclear sites. The Iranian Foreign Ministry denied the claim.

Meanwhile, UK Prime Minister Keir Starmer announced he is stepping down, potentially setting the stage for Labor Party frontrunner Andy Burnham, who was sworn in as an MP last week. A timetable outlined by Starmer could see Burnham take office by 17 July, becoming the country’s seventh leader in ten years.

SpaceX has good news… Rocketmaker and AI player SpaceX locked in a computing power agreement worth up to USD 6.3 bn with open-source AI startup Reflection, which will pay Elon Musk’s company USD 150 mn per month to access its Colossus 2 data center. This follows similar computing power-related plays with giants of the US AI scene, namely Anthropic, Google, and Cursor.

…and bad news: SpaceX lost USD 400 bn in market value, a twist of fate after its landmark debut on Wall Street. The dip was part of a wider tech selloff triggered by expectations that the Federal Reserve will hike rates as soon as September — US government bond yields climbed sharply.