Saudi Sovereign Wealth Fund Returns to Debt Market with Sukuk Offering

Saudi Arabia's Public Investment Fund (PIF) intends to access the debt market for the second time in 2024, as disclosed in a document reported by Reuters on Monday. The plan involves issuing a seven-year dollar-denominated sukuk, a type of Islamic bond compliant with Shariah law.

The sovereign wealth fund, managing assets exceeding $700 billion, has enlisted Goldman Sachs, HSBC, and Standard Chartered to arrange meetings with potential investors, according to the document. This move comes as part of PIF's strategy to tap into the growing demand for debt instruments, particularly amidst expectations of impending interest rate cuts by central banks.

In the previous month, PIF, in conjunction with the Saudi Arabian government, followed a trend among emerging market issuers by capitalizing on favorable market conditions. The fund successfully raised $5 billion through a triple-tranche conventional bond issuance in January, preceded by a $3.5 billion sukuk deal in October. Sukuk, adhering to Islamic finance principles, operate without interest payments.

PIF's substantial investment activities significantly contributed to the global sovereign wealth fund landscape, accounting for approximately a quarter of the $124 billion allocated by such funds worldwide in the previous year, according to a report from Global SWF in January.

Looking ahead, PIF aims to accelerate its capital deployment, targeting an annual increase to $70 billion post-2025, up from the current range of $40 billion to $50 billion, as revealed by PIF Governor Yasir Al-Rumayyan during a recent event in Miami. This strategic expansion underscores PIF's ambitions to bolster its investment portfolio and advance its economic objectives.

Source: Arab News