Saudi Arabia’s PIF clinches $15bn credit line

Saudi Arabia’s PIF clinches $15bn credit line
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Updated 11 March 2021

Saudi Arabia’s PIF clinches $15bn credit line

Saudi Arabia’s PIF clinches $15bn credit line
  • 17 banks involved in deal
  • Started to raise bank debt in 2018

DUBAI: The Public Investment Fund (PIF), Saudi Arabia’s premier investing institution, has arranged a $15 billion credit facility with a group of international banks as it seeks greater financial flexibility in its role as the main agency of the Kingdom’s economic transformation.

The sovereign wealth fund announced the facility on Wednesday after negotiations with international financial institutions. The amount raised is bigger than initial reports indicated late last year.

“PIF has signed a $15bn multi currency revolving credit facility with a group of 17 leading global financial institutions from Asia, the Middle East, Europe, the UK and the USA,” a statement from PIF said.

“The multi currency revolving facility reflects PIF’s prudent asset-liability management and flexibility, and forms part of its diverse and sustainable funding strategy within the Vision Realization Programs (VRP),” it added.

The Saudi government recently announced details of the second VRP running for a five-year term until 2025, designed to accelerate the diversification of the Kingdom’s economy away from oil dependency.

Under the program, PIF has pledged to inject $40 billion a year into the Saudi economy to generate jobs and stimulate private-sector activity in Saudi Arabia.

A revolving facility allows the borrower to draw down and repay parts of the facility during the duration of the loan arrangement. There was no timescale given for the facility, but reports suggested it would run for four years.

“The facility provides PIF with access to additional capital that can be deployed at speed when convenient,” the PIF said.

“PIF continues to act as a partner of choice globally, and will continue to drive the economic diversification of Saudi Arabia, investing SAR150bn ($40 billion) into the domestic economy per year,” it added.

In addition to borrowing on international financial markets, PIF receives grants from the Saudi government, dividends from its quoted investments and proceeds on asset realizations and transactions as its principal sources of funding.

In the course of the pandemic, during disruptions to the international financial markets, it took advantage of low prices to buy and sell shares in quoted companies and other securities on global stock markets.

The $15 billion facility is PIF’s third foray into global borrowing. Last year, it repaid a $10 billion syndicated loan ahead of schedule after it completed the sale of its stake in SABIC to Saudi Aramco, and in 2018 it raised an $11 billion term-loan facility from international banks.

PIF, currently with $400 billion of assets under management, plans to grow its value to more than $1 trillion by 2025.


MAF chief kicks off “humungous” Mall of Saudi project

The new mall, being developed at a cost of 16 billion riyals ($4.3 billion) over the next four years, will include six hotels and around 1,600 residential units. (Supplied/MAF)
The new mall, being developed at a cost of 16 billion riyals ($4.3 billion) over the next four years, will include six hotels and around 1,600 residential units. (Supplied/MAF)
Updated 11 sec ago

MAF chief kicks off “humungous” Mall of Saudi project

The new mall, being developed at a cost of 16 billion riyals ($4.3 billion) over the next four years, will include six hotels and around 1,600 residential units. (Supplied/MAF)
  • Mall will have the largest indoor ski slope and snow dome in the world

RIYADH: Alain Bejjani, chief executive of the Majid Al-Futtaim retail and hospitality conglomerate, told Arab News about the “humungous project” now under way in the Kingdom after he formally began construction of the Mall of Saudi.

Straight after a ground-breaking ceremony for the new mall, Bejjani said at the FII form in Riyadh: “It will be one the largest malls in the world, and will have a cutting-edge customer experience and at the edge of the leading retail of tomorrow. It will be a big attraction for shopping, leisure and entertainment, but also a big tourist attraction internally and globally.”

The new mall, being developed at a cost of 16 billion riyals ($4.3 billion) over the next four years, will include six hotels and around 1,600 residential units in “an integrated community that offers a very new lifestyle in line with Vision 2030.”

It will also have the largest indoor ski slope and snow dome in the world, he confirmed.

Although progress on the project was slowed last year by the pandemic lockdowns, behind the scenes Bejjani was working to attract tenants to the new development. “I can tell you every global brand is already in Mall of Saudi or has signed up to be there. We started leasing a year ago, and we’re very happy about the level of uptake. It’s a testimony to the Saudi market and the comeback that we’ve seen post-pandemic. This is coming back, we are recovering,” he said.

MAF group, which operates cinemas, supermarkets and hotels, in addition to malls, was seriously affected by the pandemic last year, when many of its businesses were forced to close temporarily. He said that while there was a recovery underway in the Carrefour supermarkets, the retail grocery business in Saudi Arabia was going through a “recalibration.”

“Last year we were hoarding and buying more than we needed. This isn’t happening anymore because people are no longer in fear of meeting their grocery needs. So there was a recalibration in early 2021. But from September, we are seeing growth coming back and this is very important. Next year is definitely going to be a growth year,” he said.

Many households shifted purchase of essential goods online during the pandemic, and some of that has stuck. Saudi online grocery sales are about 10-12 per cent of total sales, he said, among the highest in the region.

Two other big markets for MAF — in the UAE and Egypt — were also showing strong recovery growth, he said. “The recovery in the world retail economy is stronger than in other parts of the economy,” he added.

In the Vox cinema business, he said fears that the movie business would lose out to the streaming services like Netflix had proved to be misplaced. “People want the experience, they are coming back to the movies,” he said.

But the cinema business was still in need of good quality content, after studios were forced to stop production last year.

MAF is considering ways to promote regional and local cinema content. “What our customers want is Arabic content, Khalijee content, Egyptian content, and one of our plans is to foster local content development and production. This is something we are doing with a number of partners,” Bejjani said.

He also spoke about the chronically low levels of cross-border trade in the GCC countries, in comparison with other trading blocs such as the EU and ASEAN.

“The wider Middle East region has half the labour productivity of other parts of the world,” he said, advocating an end to tariffs and freer movement of labour, potentially involving a special “business visa” to give multiple entry in the GCC countries.


GAMI governor meets with major defense, security companies at FII

GAMI governor meets with major defense, security companies at FII
Updated 28 October 2021

GAMI governor meets with major defense, security companies at FII

GAMI governor meets with major defense, security companies at FII
  • Al-Ohali discussed strategic directions in the military industries sector in Saudi Arabia
  • He also highlighted the qualitative opportunities, great potential and unlimited support that the military industries sector enjoys in the Kingdom

RIYADH: The governor of Saudi Arabia’s General Authority for Military Industries met with various CEOs and leaders of major international companies operating in the military industries sector on the sidelines of the Future Investment Initiative on Thursday.
The meeting was attended by several companies including French defense group Thales, Boeing Defense, Space & Security, General Dynamics Corp., Leonardo SpA and Lockheed Martin.
During the meeting, Ahmed bin Abdul Aziz Al-Ohali discussed strategic directions in the military industries sector in Saudi Arabia.
He also discussed the Kingdom’s investment environment, which is witnessing an unprecedented push to empower local and international investors in light of the objectives of the Vision 2030 reform program to localize military industries in Saudi Arabia.
Al-Ohali highlighted the qualitative opportunities, great potential and unlimited support that the military industries sector enjoys in the Kingdom.
He said it is important for these companies to open headquarters in Saudi Arabia to enhance cooperation in the industrial sector and contribute to technology transfer and job creation.


TASI closes 0.4 percent down at 11,758 points: Market Wrap

TASI closes 0.4 percent down at 11,758 points: Market Wrap
Updated 28 October 2021

TASI closes 0.4 percent down at 11,758 points: Market Wrap

TASI closes 0.4 percent down at 11,758 points: Market Wrap

RIYADH: The Tadawul All-Share Index was down 49 points on Thursday closing at 11,758 points.

That represent a 0.4 percent decline.

Some 185.9 million shares changed hands in 301,000 deals, with heavy trading in AlRajhi Bank, Petro Rabigh, Sipchem

The market's decline comes under pressure from Petrochemical shares, led by SABIC's share, which fell 3 percent, to continue its decline for the third session.

On the other hand, Leejam Sports rose 5 percent to SR113.60 ($30.28), recording the highest close since its listing.

The Saudi British Bank's shares fell 2.2 percent after the bank announced a 15.5 percent drop in profits in Q3 to reach SR886 million ($236 million).

“Saudi Aramco" recorded gains of 0.1 percent. The company's shares ended the day at SR37.75 ($37.75) — the highest closing level since December 2019.

Petrochem, Sipchem, Petro Rabigh, SABIC Agri-Nutrients, Chemanol and Maaden declined between 4 percent and 6 percent.

The parallel market index "Nomu" was up 343.62 points, or 1.44 percent. It closed at 24255.84 points, after 1,348 trades.

The shares of MEPCO, Maharah and Astra Industrial recorded gains in today's session between 3 and 5 percent, amid high trading for those shares.


Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      
Updated 28 October 2021

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

Saudi banks' September claims on private sector grew by $7.8bn: SAMA      

 

Commercial banks' September claims on the private sector grew by SR29.4 billion in a month, the biggest monthly increase since June 2021.

The claims now stand at SR1.986 trillion ($529.5 billion).

Commercial banks' claims on the sector rose by 1.5 percent from SR1.956 trillion in August, Saudi Arabian central bank data published today show.

Commercial banks' September total assets grew by SR34.6 billion in month to SR3.151 trillion ($840.3 billion). Banks' total assets grew by 1.1 percent from SR3.117 trillion in August, according to data published by Saudi Central bank today.


A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap
Updated 28 October 2021

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

A slowdown in economic growth in the US; unemployment falls in Western Europe: Economic wrap

Economic growth in the US slowed to an annualized 2 percent in the third quarter of 2021, dropping from the 6.7 percent expansion it experienced in the second quarter, an advance estimate by the country’s Bureau of Economic Analysis showed. 

This is the lowest rate since the second quarter of 2020 when the economy suffered a historic contraction.

Consumer spending faced a setback due to shortfalls in some commodities as a rise in Covid-19 infections meant that the global supply chain underwent disruptions.

US jobless claims

Initial unemployment claims in the United States declined to 288,000 in the week ending 23 October, data released by the US Department of Labor showed. This is fewer than last week’s figure of 291,000 claims and is the lowest level since 14 March 2020.

The advance seasonally adjusted insured unemployment rate stood at 1.7 percent for the week ending 16 October, falling by 0.1 percent from the previous week’s level. This rate measures the percentage of the number of people receiving unemployment insurance.

Unemployment in Western Europe

The German unemployment rate tapered off slightly in September, falling to 3.2 percent down from 3.3 percent in the previous month, Germany's Federal Statistics Office said. However, the seasonally adjusted unemployment rate remained unchanged at 3.4 percent.

Meanwhile, Spain’s unemployment rate declined to 14.57 percent in this year’s third quarter, falling from 15.26 percent in the previous quarter, official data revealed. 

Japan's interest rates on hold

Japan’s central bank kept its rates unchanged for the short-term interest rate and 10-year government bond yields at -0.1 percent and around 0 percent respectively during its October meeting. 

The bank also cut its forecast for the rate of GDP growth for the current financial year to 3.4 percent down from July’s expectation of 3.8 percent.

Weak consumption and a slowdown in exports were mainly responsible for the downward revision.

As for 2022, the economic growth rate forecast was favorably altered to 2.9 percent compared to the previous 2.7 percent as vaccination rollouts gain momentum.

In addition, the bank slashed its consumer inflation estimate for the year ending March 2022 to zero compared to an earlier prediction of 0.6 percent, due to the impact of cellphone fee reductions and the change in the price index’s base year.

Looking at next year, the consumer inflation forecasts were the same at 0.9 percent.

Moreover, Japanese retail sales slipped by 0.6 percent year-on-year in September, compared to the previous month's much steeper fall of 3.2 percent. 

Spain’s inflation

Spain's annual inflation rate likely rose to 5.5 percent in October, according to a preliminary estimate by Spain's National Statistics Institute. This is a noticeable rise from the previous month’s 4 percent.

This is the biggest jump in consumer prices since September 1992 and was driven by soaring energy prices.

The annual core inflation rate, which excludes changes in volatile items, is also expected to reach a record 1.4 percent in October up from 1 percent in the previous month, a preliminary estimate showed.

In addition, consumer prices are predicted to rise 2 percent month-on-month, the highest since January 1986, after a 0.8 percent increase in September.

Brazil’s interest rate decision

For the sixth time this year, Brazil's central bank raised its interest rate by 150 basis points to reach 7.75 percent. At the start of the year, the interest rate in the country was just 2 percent.

This comes at a time when the country is grappling with double-digit inflation rates. The annual inflation rate for the country reached 10.3 percent in September. This is the second highest inflation rate among G20 countries, behind only Argentina.

Italy’s manufacturing and consumer confidence 

Italy's National Institute of Statistics (ISTAT) said that the manufacturing confidence index rose to 114.9 points in October compared to 113.2 points in September. Outlook for orders and future production improved while expectations for inventory levels were more pessimistic.

Additionally, the consumer confidence index went down by 1.2 points in October to 118.4, down from 119.6 in the previous month.