Abu Dhabi, UAEFriday 22 November 2019

Saudi Arabia’s PIF signs $10bn bridge loan facility

The sovereign wealth fund says it will repay the loan once deal to sell its stake in Sabic is completed

Site of the $500bn Neom project in the Tabuk Province of northwestern Saudi Arabia. It is one of many huge projects the Public Infrastructure Fund, which has just secured a $10bn bridging loan, is financing. Courtesy SCTH
Site of the $500bn Neom project in the Tabuk Province of northwestern Saudi Arabia. It is one of many huge projects the Public Infrastructure Fund, which has just secured a $10bn bridging loan, is financing. Courtesy SCTH

Saudi Arabia’s Public Investment Fund (PIF) signed a $10 billion (Dh36.7bn) syndicated loan facility with a group of international lenders as the sovereign wealth fund looks to accelerate the implementation of its investment programme.

The bridge loan will be repaid following completion of the agreed sale of PIF’s stake in Saudi Basic Industries Corporation (Sabic), the biggest petrochemicals producer in the Middle East, to state-controlled Saudi Aramco, PIF said in a statement on Wednesday.

Aramco, the world’s biggest oil-producing company, agreed to buy PIF’s 70 per cent stake in Sabic for $69bn in March. The sale consolidates upstream and downstream assets within Saudi Aramco ahead of a proposed share float.

“The agreed sale of PIF’s stake in Sabic is anticipated to realise a significant level of capital to be redeployed according to PIF’s mandate, however, the regulatory requirements ahead of completion mean there is likely to be a period of delay before PIF is able to redeploy that capital,” Yasir Al Rumayyan, governor of PIF, said in a statement.

“This bridge loan will enable us to accelerate the implementation of our ambitious investment program while ensuring that we maintain a conservative level of leverage.”

PIF, which manages $320bn in assets, invests on behalf of the government at home and abroad and owns stakes in many of the kingdom’s major banks and corporations. The fund is at the heart of the government’s economic reform agenda and is financing several mega developments including the $500bn futurist economic free zone Neom and the Red Sea Development Company's mega tourism project.

The syndicated bridge loan was agreed with a group of 10 international banks, including Bank of America Corporation, BNP Paribas, Citigroup, Credit Agricole CIB, HSBC, JP Morgan, Mizuho Bank, MUFG Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corporation.

These banks are all part of PIF’s core banking group, created in September 2018 when it signed a $11bn international syndicated loan facility.

Updated: October 31, 2019 01:42 PM

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