Saudi Wealth Fund Taps Debt Market with $2 Billion Sukuk Sale
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has raised $2 billion from the sale of Islamic bonds, or sukuk, in its second debt issuance this year, joining a wave of emerging-market borrowers seeking to take advantage of the low-interest-rate environment.
The PIF sold seven-year dollar-denominated sukuk at 85 basis points over the U.S. Treasuries, according to a person familiar with the matter, who asked not to be identified as the information is private. The order book was more than eight times oversubscribed, attracting over $16 billion in bids, including joint lead managers’ interest, the person said.
The PIF, which manages more than $700 billion in assets, is a key pillar of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the Saudi economy away from oil and transform it into a global investment powerhouse. The fund plans to invest hundreds of billions of dollars in the coming years in sectors such as technology, tourism, entertainment, and sports.
The sukuk sale follows the PIF’s debut bond issuance in January, when it raised $5 billion from the sale of five- and 10-year conventional bonds at 55 and 85 basis points over the U.S. Treasuries, respectively. The fund said at the time that the proceeds would be used for general corporate purposes.
The PIF’s latest sukuk offering comes amid a surge in emerging-market debt issuance, as borrowers seek to lock in low borrowing costs and bolster their finances amid the COVID-19 pandemic and its economic fallout. According to Bloomberg data, emerging-market governments have sold about $58 billion of dollar bonds so far this year, the highest amount for this period in at least two decades.
Saudi Arabia, the world’s largest oil exporter, has also been active in the debt market, as it seeks to finance its budget deficit and support its economic recovery. The kingdom raised $5 billion from the sale of conventional and Islamic bonds in January, and another $3 billion from the sale of euro-denominated bonds in February.
The PIF’s sukuk sale was arranged by Goldman Sachs Group Inc., HSBC Holdings Plc, and Standard Chartered Plc as global coordinators, and Alinma Investment Co., Dubai Islamic Bank PJSC, Emirates NBD Capital Ltd., Mizuho Securities Co. Ltd., and SMBC Nikko Capital Markets Ltd. as joint lead managers. The sukuk are expected to be listed on the Irish Stock Exchange.
Comments
Post a Comment
Please post your valuable insights on this article for other readers to better interpret this article and become a more informed person.