PIF Announces Pricing of Its Inaugural Pound Sterling Bond Offering

Saudi Arabia’s sovereign wealth fund – Public Investment Fund (PIF) – on Wednesday said that it has successfully priced its inaugural sterling bond offering of $830 million under its existing Euro Medium-Term Note program.

The issuance is part of PIF’s strategy to continually diversify its funding sources and was oversubscribed more than six times. The offering in two tranches include a five-year coupon of $383.29 million and 15-year coupon for $447.18 million.

Loans and debt instruments represent one of PIF’s four primary sources of funding. The other sources are retained earnings from investments, capital injections from government and government assets transferred to PIF. PIF is rated A1 by Moody’s with a positive outlook and A+ by Fitch with stable outlook.

Euro Medium-Term Notes (EMTNs) are issued outside the US and Canada and in the markets that deal euro currencies and the securities enable investors to get access to foreign currencies. EMTNs pay a higher rate of interest. Since the securities are customised to the needs of the investor, they involve high dealer expenses.

An EMTN programme is a standardised issuance document used by global borrowers and accepted by global investors. EMTNs can be issued as standard debt securities or as structured notes with bespoke pay-offs.

EMTN programmes have a panel of investment bank dealers that act as agents and under writers for debt that issuers can continuously offer under the programmes, but also allow banks to be dealer for the day. Programmes are typically listed on regulated stock exchanges.

Previous Bond Pricing

According to English daily Arab News, PIF completed the pricing of a bond offering worth $5 billion in January and the offering was over five times oversubscribed, with order books reaching $27 billion.

The offering in January was divided into three tranches – one valued at $1.75 billion with a 5-year coupon maturing in 2029, another for the same amount with a 10-year coupon, and the final was valued at $1.5 billion over a 30-year period.

In April, BlackRock Saudi Arabia and PIF signed a memorandum of understanding which entitled the former to establish a Riyadh-based multi-asset investment platform.

The platform will be anchored by an initial investment mandate of up to $5 billion from PIF, subject to the achievement of agreed milestones between the parties, the PIF said.

According to a report by the Sovereign Wealth Fund Institute, PIF has climbed to fifth in a ranking of state-owned investment organisations, with its assets under management reaching $861 billion. The analysis added that the wealth fund is marching toward its end-2025 target of $1 trillion in assets, aimed at diversifying the Kingdom’s economy.