Saudi's PIF Issues $5 Billion Three-Part Bond

Saudi's PIF Issues $5 Billion Three-Part Bond

By Staff Writer, 26 January 2024

On Monday, Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), made a significant move in the capital markets by launching a $5 billion bond, as reported by IFR.

The PIF, boasting assets totaling around $718 billion as of September 30, is following the trend of several emerging market entities that have tapped into the debt market in the current year.

The bond sale, structured into three tranches, attracted robust demand, with orders exceeding $27 billion, according to IFR.

The final spreads narrowed from the initial guidance, resulting in 115 basis points (bps) over U.S. Treasuries for the 5-year bonds, 145 bps for the 10-year bonds, and 205 bps for the 30-year portion.

Leading the joint coordination for the bond offering were Citi, Goldman Sachs International, and J.P. Morgan, according to official documents.

The PIF, a strategic initiative of Saudi Crown Prince Mohammed bin Salman, serves as a key instrument in the country's ambitious plan to reduce dependence on oil and diversify the economy.

The fund has successfully raised substantial funds to support its program, aiming to create new industries and jobs both domestically and internationally through various investments, joint ventures, and debt market engagements. In October of the previous year, the PIF concluded the issuance of Islamic bonds worth $3.5 billion.

Saudi Arabia, a major global oil exporter, recently carried out a $12 billion, three-part bond issue this month, showcasing strong demand.

The emerging markets' debt issuance landscape in 2024 has seen an impressive start, with total bond sales in the first half of January surpassing $30 billion.

Noteworthy instances include Mexico's record-breaking $7.5 billion sale, Poland, Hungary, and Indonesia actively participating in the market, and Saudi Arabia's PIF joining the ranks.

Analysts from Morgan Stanley project that developing countries will issue nearly $165 billion this year, representing a substantial 20% increase, approximately $30 billion, compared to 2023.

Source: Zawya

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