PIF’s gaming wager nears EU approval

Good morning, friends, and welcome back from a tense weekend. Residents of Al Kharj and Yanbu were briefly put on alert early Saturday after the Civil Defense fired warnings through the National Early Warning Platform, only to stand everyone down shortly after with word that the threat had cleared. The scare follows Iran’s ballistic missile strike on a US base in the Kingdom, the first time in four months Iran has hit Saudi soil.

In today’s issue: The business of the Kingdom carries on, and 2Q told a striking story. Saudi Arabia reclaimed its spot as the Gulf’s largest projects market, the only GCC country where contract awards rose both q-o-q and y-o-y. The figures rebounded from a 1Q that was the second-lowest quarter in more than five years. That unseats the UAE, which had led the region for two straight quarters.

The war will show up in the earnings, though. Riyad Capital expects 2Q results to split along geopolitical fault lines, with shipping disruptions, travel restrictions, and oil price volatility sorting the gainers from the losers. Worth keeping in mind as the numbers land.

PIF’s EA play out of the woods?

PIF’s gaming wager is about to clear Europe: A consortium led by the Public Investment Fund (PIF) is expected to secure EU approval for its USD 55 bn acquisition of Electronic Arts (EA) under the bloc’s foreign subsidies and merger rules, Reuters reports, citing unnamed sources. The preliminary merger review ends 22 July and the subsidies review on 30 July, with unconditional clearance anticipated for both.

Why it matters: The transaction, backed by PIF, Trump son-in-law Jared Kushner’s Affinity Partners, and Silver Lake, is the largest leveraged buyout on record. EU approval is the last major hurdle facing the transaction.

REMEMBER- The financing is already in place. JPMorgan placed some USD 15 bn in debt to fund the acquisition in March, drawing over USD 50 bn in investor demand despite war-driven volatility and loans trading up on day one. A group of bondholders tried to block the financing but lost their leverage when S&P wouldn’t rate the replacement bonds.

Shifting west

Saudi crude is being pulled away from Hormuz, again. Oil loadings from the Kingdom’s Gulf terminals have dropped as renewed attacks on commercial tankers in the Strait of Hormuz disrupt shipping, Bloomberg reports, citing satellite imagery. Just one tanker berthed at Saudi’s main Gulf export facilities as of Wednesday, after a brief recovery between late June and early July faded. The UN’s shipping agency has warned Hormuz is now too unsafe to transit.

The Red Sea workaround is coming under pressure too. Some 4 mn bpd have been rerouted via pipeline to the Red Sea coast, keeping exports near 4.6 mn bpd, down from 7.3 mn bpd pre-war but far higher than Hormuz alone allows. Those barrels still exit through the Bab Al Mandeb strait on the Red Sea, where the Houthis last week escalated by firing drones and missiles at Abha International Airport and threatening to target Saudi oil facilities if Riyadh returns to war in Yemen.

Why it matters: A simultaneous disruption of both Hormuz and Bab Al Mandeb could tip the global economy into recession, Capital Economics warns. The two waterways are the Kingdom’s only routes to its main Asian customers. The counterargument is Saudi payments should keep the Houthis from major strikes on energy assets, though escalation could push them toward limited actions that stop short of disrupting crude flows.

Not just us: Iraq’s exports have also slowed as tanker shortages force producers to curb output — Baghdad is almost entirely dependent on its Basra Oil Terminal, with no sea alternative. UAE loadings had remained resilient as of Monday, before attacks on two Emirati tankers later in the week. Iran’s own crude loadings appear to have also dropped sharply.

World Cup venue up for co-investment

PIF-owned Roshn is shopping for outside investors for Aramco Stadium, the 47k-seat 2034 World Cup venue in Al Khobar, with JPMorgan running the equity fundraise as the developer seeks to make capital available for other projects, Reuters reports, citing three sources. The stadium is set to be complete by year-end and ready for its first match in January.

Roshn would set up a vehicle to control the leasehold, co-owned with investors who put up capital in exchange for a long-term share of lease payments from Aramco, which operates the stadium under a 25-year concession. It’s the same lease-and-leaseback model Aramco used for its pipeline assets, which drew EIG Global Energy Partners and BlackRock’s Global Infrastructure Partners.

The pattern is hard to miss. Kingdom Holding took 70% of Al Hilal from PIF in April, a US investor acquired Al Kholood last year, PIF has been in discussions over a minority stake in Newcastle United, and now a World Cup stadium. The direction is consistent: PIF is pulling in private capital rather than funding projects directly, a shift driven by a widening budget deficit that reached USD 74 bn last year and softer oil prices. This is the same recalibration behind the Neom pullback, the SPL club sales, and budget cuts of USD 200-400 mn across the Big Four SPL teams that are readying for the courts.

REMEMBER- Riyadh is building or renovating 15 stadiums and 132 training venues across five cities for the 2034 tournament, the first single-nation hosting of the expanded 48-team format.

Back to square one?

The average sovereign risk premium across Middle Eastern governments jumped by roughly 20 basis points to 402 points over Treasury yields in the week since US President Donald Trump effectively ended the interim US-Iran ceasefire, Bloomberg reports. This is the widest the spread has been in almost four years, and it’s on pace for the fastest YTD widening since 2018.

The region had just spent June recovering. As we reported at the time, spreads had tightened meaningfully from their war-era wides. Bahrain returned to public debt markets for the first time since the fighting began, and banks started rushing back into debt markets. Bankers we spoke with then were bracing for a normal summer lull — not a reversal. We’ll be keeping an eye on the pricing of upcoming issuances and how spreads move in the next few weeks.

Data point

1.27 mn — that’s the number of Umrah pilgrims arriving from outside Saudi Arabia since the start of the season, with total Umrah visa arrivals reaching 931.5k as of 12 July, up 22.5% y-o-y, the Hajj and Umrah Ministry said. Pakistan was the largest source with 200k pilgrims, followed by Indonesia (170k) and Iraq (130k).

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The big story abroad

It is an oddly quiet morning on the international front pages, with the latest war updates receiving top billing.

The renewed regional war is showing no sign of slowing down. The US military launched fresh attacks yesterday to “swiftly punish” the Islamic Revolutionary Guard Corps for a strike on Jordan that killed two US soldiers. Tehran announced yesterday that it would no longer adhere to the terms of the interim truce, and launched a round of strikes on Jordan and Kuwait.

Can manual labor relieve Gen Z’s AI job woes? A wave of young content creators is pitching blue-collar jobs to a Gen Z audience increasingly anxious about an unsteady labor market and AI-driven layoffs. The movement is changing conceptions surrounding jobs — in plumbing, carpentry, and welding — that may be more lucrative and secure than most people think.

The final of the 2026 World Cup kicks off tonight, with defending champion Argentina facing off against Spain. England secured its third-place position yesterday after defeating France 6-4. The final starts at 10pm local time.