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The strong global investor appetite for Saudi Arabian debt helped the kingdom’s sovereign wealth fund price its $4 billion USD dual tranche notes tighter than initial price thoughts (IPT).
The Public Investment Fund (PIF) priced the Regulation S senior unsecured notes with five year and long 9-year maturities at premiums above US Treasuries of 95 and 110 basis points (bps) respectively, both 30 basis points narrower than the IPTs.
The tighter pricing came as investor demand topped $16 billion across both tranches, excluding joint lead manager (JLM) interest.
PIF manages $925 billion in assets and is the key driver of Saudi Arabia’s Vision 2030 programme, a strategy aimed at helping the oil-rich kingdom diversify away from fossil fuels.
The issuance is the latest in what has been a busy January in the debt markets for the both the sovereign wealth fund and the Saudi government.
Early in the month, the government via the National Debt Management Center (NMDC) raised $12 billion from global debt markets in a three-part bond sale for which the total order book was at $37 billion. NMDC also secured a $2.5 billion revolving credit facility from international banks. Within days PIF tapped 20 international and global financial institutions for a $7 billion debut murabaha credit facility.
The world’s biggest oil exporter has forecast a fiscal deficit of $27 billion for 2025. Goldman Sachs Research said Saudi Arabia is expected to invest $1 trillion across six strategic sectors by 2030 in what it called a “capex super-cycle.”
S&P Global said it expects Saudi issuers to continue tapping the global and the local capital markets to finance Saudi Vision 2030. “While this appears manageable in the short term, we are keeping an eye on the leverage build-up in the medium-to-long term. We still expect leverage to remain manageable in our base-case scenario, with private-sector debt to GDP staying below the 100% mark in the next 12-24 months,” said Mohamed Damak an analyst with S&P Global.
The senior unsecured notes were issued through GACI First Investment Company under its Euro Medium Term Note Programme and guaranteed by PIF, rated Aa3(Stable) by Moody’s / A+ (Stable) by Fitch.
Coupon is fixed rate, semi-annual 30/360 and settlement date is 29, January 2025. The issuance is expected to be rated Aa3 / A+ (Moody's/Fitch).
(Reporting by Brinda Darasha; editing by Seban Scaria)