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HomeFinanceSaudi Public Investment Fund Sets Bond Pricing Indicators

Saudi Public Investment Fund Sets Bond Pricing Indicators

PIF Rolls Out Terms for US-Dollar Bonds in Multi-Tranche Offering

January 23, 2024
in Finance, PIF
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The Saudi Public Investment Fund (PIF) has unveiled preliminary pricing guidelines for its upcoming bond offering, which is to be denominated in US dollars and segmented into three tranches.

For the tranche maturing in 2029, the fund is considering a pricing spread of 150 basis points above the benchmark US Treasuries for its five-year securities, which will include a par call feature available after one month.

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The second set of bonds, with a maturity date in 2034, is being offered at a suggested price guidance of 175 basis points over US Treasuries. These 10-year bonds come with a par-call option that can be exercised after three months.

In the longest-term segment, the 30-year bonds maturing in 2054 are indicated to have a spread of 235 basis points over US Treasuries, accompanied by a six-month par call option.

Joint global coordinators for this bond issuance include Citi, Goldman Sachs International, and J.P. Morgan, as indicated in a banking document.

It is expected that the bonds will be assigned an A+ rating by Fitch, aligning with the credit agency’s Government-Related Entities Rating Criteria. This rating reflects the strong connection PIF has with the Saudi Arabian government and Fitch’s assessment that the government is likely to provide support to the fund if needed.

The PIF had previously completed a successful Shariah-compliant bond offering in October 2023, raising $3.5 billion. The issuance attracted significant interest, with bids exceeding $25 billion, more than sevenfold the offered amount. This reflects the investors’ strong confidence in the fund’s strategies and management.

This Islamic bond issue was divided into two tranches, with $2.25 billion maturing in 2028 and $1.25 billion due in 2033.

Fahad Al-Saif, who leads the PIF’s Global Capital Finance Division, remarked in October 2023 that the international sukuk issuance marked a significant step in the PIF’s capital raising strategy and its endeavors to expand its funding base.

As an influential global investor, the PIF oversees a diverse and sustainable portfolio that encompasses both domestic and international investments. The fund is one of the largest sovereign wealth funds worldwide, with its investments spurring innovation, transforming industries, creating employment opportunities, and propelling the economic expansion of Saudi Arabia.

Tags: Bond OfferinginvestmentPublic Investment Fundsaudi arabiaSovereign Wealth Fund
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