RIYADH: The Public Investment Fund (PIF), the growing Saudi Arabian sovereign wealth fund, has clinched a $10 billion (SR37.5 billion) bridging loan via a syndicate of 10 international banks, including three Japanese financial institutions.
The loan will tide the PIF over in terms of general corporate expenses and investment requirements until the proceeds from the $69 billion sale of its shares in SABIC (the Saudi diversified manufacturing company) to Saudi Aramco come through, it was announced at the Future Investment Initiative (FII) forum in Riyadh.
Yasir Al-Rumayyan, governor of the PIF, said: “The agreed sale of the PIF’s stake in SABIC is anticipated to realize a significant level of capital to be redeployed according to the PIF’s mandate. However, the regulatory requirements ahead of completion mean there is likely to be a period of delay before the PIF is able to redeploy that capital.
“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,” he added.
The loan will be repaid following completion of the SABIC-Aramco transaction.
The PIF said in its Program 2018-2020 document, launched at the first FII in October 2017, that its four sources of funding were capital injections by the government, asset transfers from the government, retained investment returns, and PIF loans and debt instruments independently issued by the fund.
Illustrative of the growing financial relationship between the Kingdom and Japan, three of the 10 banks in the international syndicate that financed the loan were Tokyo based, namely Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation.
The others were Bank of America Corporation, BNP Paribas, Citigroup, Credit Agricole CIB, HSBC, J.P. Morgan, and Standard Chartered.
The Kingdom has been increasingly encouraged to tap international markets for loans and bond finance. Earlier this year, Aramco raised $12 billion in a global issue that attracted interest worth more than $100 billion.