Saudi Public Investment Fund begins selling green sukuk and bonds

Saudi Public Investment Fund begins selling green sukuk and bonds
Saudi Public Investment Fund is one of the largest sovereign wealth bodies in the world. File
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Updated 03 September 2024
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Saudi Public Investment Fund begins selling green sukuk and bonds

Saudi Public Investment Fund begins selling green sukuk and bonds

RIYADH: Saudi Arabia’s sovereign wealth fund is preparing to issue a benchmark-sized three-year sukuk and a green bond maturing in 2032, Reuters reported, citing bank documents. 

The report said that three-year sukuk is priced between 80 and 85 basis points above the US Treasury bonds, while the green note stands at 135 bps. 

Benchmark size typically refers to at least $500 million.

The proceeds from the sukuk sale will be directed toward the general purposes of the fund, while the green bond sale will be used for eligible projects, the release added. 

Goldman Sachs, HSBC Holdings and JPMorgan Chase & Co. are among the bookrunners. 

This will mark the fourth time the Public Investment Fund has tapped the bond market to support its major investment plans, including the development of giga-projects in the Kingdom. 

In 2023, PIF raised $7 billion through two dollar bond sales and an additional $850 million from a sterling-denominated issue.

In August, the fund also obtained a $15 billion revolving credit facility for general corporate purposes from a diverse global syndicate of 23 financial institutions from Europe, the US, the Middle East, and Asia. 

In a statement, PIF said that this credit facility is offered for an initial period of three years, and is extendable for up to two additional years. 

The fund added that this credit facility will replace the previous revolving arrangement agreed on in 2021. 

Loans and debt instruments represent one of PIF’s four sources of funding.  The other three are capital injections from governments, state assets transferred to PIF, and retained earnings from investments. 

The fund is currently spearheading the economic diversification efforts of Saudi Arabia, as the Kingdom is steadily reducing its decades-long dependence on oil. 

Since 2017, PIF has established 95 companies and injected at least SR150 billion ($39.97 billion) into the local economy annually. 

In July, a report released by KPMG noted that the total revenue of PIF climbed by more than 100 percent year-on-year in 2023 to reach SR331 billion. 

The financial results also affirmed PIF’s robust position, earning an A1 rating from Moody’s with a positive outlook and an A+ standing from Fitch with a stable outlook.  


Oil Updates – prices rise on US storm, fears of Israel-Iran conflict

Oil Updates – prices rise on US storm, fears of Israel-Iran conflict
Updated 10 October 2024
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Oil Updates – prices rise on US storm, fears of Israel-Iran conflict

Oil Updates – prices rise on US storm, fears of Israel-Iran conflict

SINGAPORE: Oil prices rose on Thursday underpinned by a spike in fuel demand as a major storm barrelled into Florida and concerns about potential supply disruptions in the Middle East amid heightened tensions between Israel and major oil producer Iran.

Brent crude futures rose 24 cents, or 0.3 percent, to $76.82 a barrel, while the US West Texas Intermediate futures were up 28 cents, or 0.4 percent, at $73.52 a barrel at 9:55 a.m. Saudi time.

The world’s largest oil producer and consumer has been hit by a second major storm, Hurricane Milton, which made landfall on Florida’s west coast, spawning tornadoes and threatening surges of seawater.

The storm has already driven up demand for gasoline in the state, with about a quarter of fuel stations selling out of supplies, which has helped to support crude prices.

Further underpinning prices, investors remained wary of escalating tensions between Israel and Iran, with Israeli Defense Minister Yoav Gallant promising an Israeli strike against Iran would be “lethal, precise and surprising.”

US President Joe Biden spoke with Israeli Prime Minister Benjamin Netanyahu about Israel’s plans concerning Iran in a 30-minute call on Wednesday that the White House described as “direct and very productive.”

Biden “continues to discourage Israel from targeting oil facilities, but there is growing concern that Israel’s allies have little influence on its strategy,” analysts at ANZ said in a note on Thursday.

Even with threats to the oil-producing Middle Eastern region top of mind, concerns about demand continue to underpin the fundamental outlook. The US Energy Information Administration on Tuesday downgraded its demand forecast for 2025 on weakening economic activity in China and North America.

EIA data on Wednesday showed crude inventories jumped by 5.8 million barrels to 422.7 million barrels last week. That was a bigger build than analysts polled by Reuters had expected, but much lower than estimated on Tuesday by the American Petroleum Institute industry group.

However, oil demand has grown this month, according to analysts at JPMorgan, helping to support prices.

“In the US, gasoline demand surged by 800 kbd week over week. Across Asia, flight activity rebounded after being disrupted by multiple typhoons. In China, daily flight activity soared to an eight-week high,” the analysts said in a note.

“With the majority of travel-related demand now behind us, the focus shifts to the impending weather-driven rise in demand in the coming weeks.” 


Saudi Arabia’s industrial production rises in August on mining gains 

Saudi Arabia’s industrial production rises in August on mining gains 
Updated 10 October 2024
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Saudi Arabia’s industrial production rises in August on mining gains 

Saudi Arabia’s industrial production rises in August on mining gains 

RIYADH: Saudi Arabia’s Industrial Production Index climbed 1 percent in August compared to the same month last year, driven by a rise in mining and quarrying activities, according to official data. 

According to the General Authority for Statistics, mining and quarrying expanded 0.8 percent year on year, as Saudi oil output rose to 8.99 million barrels per day, up from 8.92 million bpd a year earlier.  

The growth pushed the IPI to 105 points for the month, marking steady industrial expansion. 

The Kingdom’s manufacturing sector has consistently expanded in recent years, driven by Vision 2030’s push to diversify the economy and enhance industrial output, reducing the country’s reliance on oil revenues.  

This aligns with broader economic goals aimed at creating a sustainable, non-oil-based growth model. 

“Compared to August of the previous year, the sub-index of manufacturing activity increased by 1.1 percent, supported by an increase in the manufacture of chemicals and chemical products, and manufacture of food products which increased by 2.9 percent and 12.9 percent, respectively,” stated GASTAT.  

Meanwhile, the manufacture of coke and refined petroleum products decreased by 11.3 percent.  

The report added that electricity, gas, steam, and air conditioning supply rose by 4.1 percent year on year, although water supply, sewerage, and waste management activities fell 0.9 percent.  

GASTAT highlighted that non-oil activities surged 7 percent compared to July, while oil-related output dropped 1.4 percent. 

On a month-to-month basis, the overall IPI slipped 0.3 percent from July. The sub-index for mining and quarrying activity increased by 0.6 percent, while manufacturing output fell 1.8 percent.  

GASTAT further noted that electricity, gas, steam, and air conditioning supply activities increased by 1.7 percent month on month, while water supply, sewerage, waste management, and remediation activities rose by 1 percent. 

However, the index for oil activities dropped by 0.7 percent in August compared to the previous month, while non-oil activities recorded a 0.6 percent increase.  

The IPI is an economic indicator that measures fluctuations in industrial output, calculated through the industrial production survey. It follows the International Standard Industrial Classification of All Economic Activities to ensure consistency and comparability across sectors.


World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan

World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan
Updated 10 October 2024
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World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan

World Bank raises South Asia growth forecast to 6.4% on India demand, quicker recoveries in Pakistan
  • The upward revision confirms South Asia as the fastest growing emerging economy region monitored by the World Bank
  • Bank projected Pakistan’s economy would grow by 2.8% in current fiscal year on recovery in manufacturing, easing monetary policy

NEW DELHI/LONDON: The World Bank raised its growth forecast for South Asia to 6.4 percent in 2024 from an earlier estimate of 6.0 percent, citing the strength of domestic demand in India and quicker recoveries in crisis-hit countries such as Sri Lanka and Pakistan.
India’s economic growth forecast for the current fiscal year, ending in March 2025, was revised to 7 percent year-on-year, up from April’s estimate of 6.6 percent, helped by a rebound in agricultural output and increased private consumption.
“You have an emerging class of consumers in India that’s driving the economy forward, you have recoveries from crises in Sri Lanka and in Pakistan, you also have a tourism-led recovery in Nepal and Bhutan,” Martin Raiser, World Bank Vice President for South Asia, told Reuters.
The upward revision confirms South Asia as the fastest growing emerging economy region monitored by the World Bank. The Washington-based lender projects South Asia will see robust 6.2 percent growth annually for the following two years.
Raiser said there was “significant upside potential” to growth with greater integration of South Asian countries into the global economy, but countries needed to stick with economic reform programs to sustain momentum.
On Wednesday, India’s central bank maintained its GDP growth forecast at 7.2 percent for the current fiscal year and shifted its policy stance to neutral.
The World Bank projected Pakistan’s economy would grow by 2.8 percent in the current fiscal year, which started in July, an increase from the previous estimate of 2.3 percent, aided by a recovery in manufacturing and easing monetary policy.
Sri Lanka, which is clawing its way out of a sovereign debt default and its worst economic crisis in decades, saw the biggest upward revision, with growth expected to come in at 4.4 percent this year and 3.5 percent in 2025.
Nepal’s growth forecast was raised to 5.1 percent from 4.6 percent for the 2024/25 fiscal year beginning mid-July, and Bhutan’s to 7.2 percent from 5.7 percent.
But Bangladesh’s growth forecast was downgraded to 4.0 percent from 5.7 percent for the fiscal year 2024/25, spanning from July to June, reflecting a slowdown in garment exports amid recent social unrest.
The World Bank recommended the region should boost women’s labor force participation — currently the lowest globally at 32 percent. Raising employment among women to levels comparable to those among men could raise output by as much as one-half in the long term, the report said.
“Bringing more women into the labor force could add significantly to the production potential,” said Raiser.


WEF launches digital platform focused on clean energy investment in emerging markets

WEF launches digital platform focused on clean energy investment in emerging markets
Updated 09 October 2024
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WEF launches digital platform focused on clean energy investment in emerging markets

WEF launches digital platform focused on clean energy investment in emerging markets
  • Playbook of Solutions outlines 100 policy, finance and de-risking solutions from 47 countries

DUBAI: The World Economic Forum last week launched a digital platform outlining 100 policy measures, finance mechanisms and de-risking solutions in 47 emerging and developing economies.

Known as the Playbook of Solutions, it was assembled by the Network to Mobilize Investment for Clean Energy in the Global South, which was launched at the WEF’s annual meeting in Davos in January.

Emerging markets and developing economies will represent 90 percent of the growth in global energy demand by 2035, according to a report by the International Energy Agency and International Finance Corp.

Yet these countries, which are home to a majority of the world’s population, account for less than a fifth of global clean energy investments, the report said.

In order to speed up the transition to clean energy and triple renewables by 2030, the annual average investment in renewable energy will need to reach at least $1.7 trillion by 2030, it said.

With this in mind, the Playbook of Solutions aims to guide governments, finance institutions and energy companies regarding their approach toward energy transition project financing in emerging markets.

It also highlights the need for a multipronged approach of policy action, de-risking tools and innovative financing mechanisms to unlock the $1.7 trillion needed in the Global South.

“The MENA region has shown remarkable advancements in its energy transition over the past decade,” Roberto Bocca, head of the WEF’s Center for Energy and Materials, told Arab News.

He said that according to the WEF’s latest Energy Transition Index, the region’s energy transition scores had increased by 7 percent overall, “with a substantial 22 percent rise in transition readiness.”

This progress “reflects the importance and efficacy of implementing a comprehensive blend of policies and strategies to unlock clean energy investment” and the new playbook “showcases various tools and measures for achieving this,” he said.

The playbook also highlights the success stories of four countries: Egypt, India, Chile and Brazil and how they raised billions in clean energy capital through a combination of strategies including policy measures and finance platforms.

“Country-led commitment reforms and platforms are critical to align sustainable development efforts in a way that prioritizes national objectives and accelerates progress toward a just, green transition,” said Rania Al-Mashat, minister of planning, economic development and international cooperation of Egypt and co-chair of the Network to Mobilize Investment for Clean Energy in the Global South.

The playbook “provides an effective way to exchange best practices and lessons learned between peer countries, thus unlocking just financing solutions that accelerate progress toward a just energy transition,” she said.


Low carbon concrete solution to land in Saudi Arabia as UK’s Next Generation SCM and Nizak Mining Co. partner

Low carbon concrete solution to land in Saudi Arabia as UK’s Next Generation SCM and Nizak Mining Co. partner
Updated 09 October 2024
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Low carbon concrete solution to land in Saudi Arabia as UK’s Next Generation SCM and Nizak Mining Co. partner

Low carbon concrete solution to land in Saudi Arabia as UK’s Next Generation SCM and Nizak Mining Co. partner
  • Joint venture leverages advanced technology to create a premium SCM using a pioneering process that is highly energy efficient
  • First factory under this venture will be established in Riyadh, targeting the start of production by the third quarter of 2025

RIYADH: The first low-carbon concrete solution is set to land in Saudi Arabia as the UK’s Next Generation SCM and Nizak Mining Co., a subsidiary of City Cement, have formed a joint venture.

Aiming to produce market-sustainable supplementary cementitious materials regionally, the joint venture leverages advanced technology to create a premium SCM using a pioneering process that is highly energy efficient, consuming only one-sixth of the fuel required for conventional cement production. 

This process operates at lower temperatures, significantly reducing operational costs and cutting emissions. 

In its existing plant in Denmark, the technology can produce calcined clay while generating only 8 kg of carbon dioxide per ton — representing a 99 percent reduction compared to the International Energy Agency average of 600 kg per ton for traditional cement.

The first factory under this venture will be established in the capital, Riyadh, targeting the start of production by the third quarter of 2025. It is expected to produce 350,000 tonnes in its initial year, ramping up to 700,000 tonnes in the second year. 

The partnership aims to introduce innovative concrete solutions that significantly reduce carbon emissions, aligning with Saudi Arabia’s Vision 2030 goals for sustainable infrastructure development. 

The Kingdom aims to cut carbon emissions by 278 million tonnes annually by 2030. This target is part of its Vision 2030 and the Saudi Green Initiative, which focus on reducing emissions, increasing renewable energy production and implementing large-scale afforestation projects. 

The production of SCM through this joint venture aims to cut the carbon footprint of concrete significantly. 

While a cubic meter of traditional concrete typically emits 210 kg of CO2, this premium calcined clay SCM can cut emissions by up to 58 percent.

Christian Husum, CEO and founder of Next Generation SCM, emphasized the global impact of the technology. 

“There are over 4 billion people who live in urban areas right now, and that is going to increase by 2 billion over the next 30 years. This is a massive, global building project, which is equivalent to building an additional New York City every month,” he said. 

“There is also no way for our planet to cope with concrete production at that scale unless we find a way of producing it without generating enormous amounts of carbon emissions. Now, there is a way. This joint venture will put the process into practice to bring about a revolution in how we build everything from stadiums to skyscrapers in Saudi Arabia, the Middle East, and then the world,” Husum added. 

The initiative will introduce the patented CemTower technology, developed by Danish firm CemGreen, into the Gulf Cooperation Council market. This technology will expand the region’s capabilities in producing sustainable concrete solutions. 

Traditional SCM alternatives, such as fly ash and slag, are not locally available in Saudi Arabia, making this venture a crucial step for the domestic production of low-carbon materials. 

The joint venture between Next Generation SCM and City Cement is set to be the first in the Kingdom to produce premium calcined clay SCM, offering a strategic advantage for local and regional markets. 

“This joint venture is a significant step in our commitment to the continued growth of Saudi Arabia as a global materials and infrastructure hub. Not only will it support domestic job creation, it will also dramatically improve accessibility to a critical low-carbon material that we will soon be able to export around the region,” Majed Al-Osailan, CEO and board member of City Cement, said.