Saudi Arabia’s state-owned investment engine, the Public Investment Fund (PIF), has attracted significant investor attention, receiving orders surpassing $20 billion for its recent dollar-denominated bond offering. This substantial interest was reported by IFR, a specialized capital markets publication.
As of September 30, the PIF managed approximately $718 billion in assets and is now part of a broader trend of emerging market entities seeking funds through the debt market this year.
The PIF disclosed preliminary terms for the bond issue, which included a spread of roughly 150 basis points above U.S. Treasuries for five-year notes, 175 basis points for ten-year notes, and 235 basis points for the thirty-year tranche, according to a document provided by one of the banks involved.
Leading the coordination of the bond sale are Citi, Goldman Sachs International, and J.P. Morgan, as indicated in the financial documents.
The announcement of the final amount raised by the bond sale is anticipated to occur later on the same day.
The PIF is central to the vision of Saudi Crown Prince Mohammed bin Salman, who intends to diversify the kingdom’s economy beyond oil. The fund is aggressively investing in new sectors to create industries and employment opportunities, both within the nation and internationally, through various investments, partnerships, and by accessing debt markets.
Earlier this month, Saudi Arabia, the world’s leading oil exporter, issued a $12 billion bond divided into three parts, following a $3.5 billion sukuk, or Islamic bond, completed by the PIF last October. Both offerings saw robust investor demand.
The start of 2024 has seen a flurry of activity in emerging market debt issuance, with bond sales in early January exceeding $30 billion. While debt sales have predominantly involved higher-rated sovereigns, countries like Mexico, Poland, Hungary, and Indonesia have been active participants.
Beyond Saudi Arabia, analysts anticipate that at least five countries—including Indonesia, Poland, Turkey, Israel, and Mexico—will each issue bonds worth at least $10 billion. Mexico’s issuance might even reach $18 billion.
Projections by Morgan Stanley’s analysts suggest that developing nations are likely to issue close to $165 billion in debt this year, marking an increase of approximately 20 percent or $30 billion from the previous year.