The Saudi Arabian Public Investment Fund (PIF) is contemplating an increase in bond sales and IPOs to finance the ambitious economic transformation project spearheaded by Crown Prince Mohammed bin Salman.
What Happened: The PIF is considering a surge in debt sales or bank loans to finance the trillion-dollar economic transformation project led by Crown Prince Mohammed bin Salman, reported Bloomberg. The fund’s cash reserves have dwindled to $15 billion, the lowest since 2020.
The PIF, a key driver of Saudi Arabia’s Vision 2030 program, is under pressure to secure funding for its multi-billion dollar spending commitments. This urgency is further compounded by the government’s forecasted budget deficit until 2026.
As part of its funding drive, the $940 billion PIF is considering additional bond sales and IPOs for its portfolio companies. The fund is also looking to minimize liquidity drain from local banks by encouraging its subsidiaries to rely on dollar borrowing.
Despite the PIF’s recent $7 billion bond issuance, experts believe this is just the beginning, given the fund’s shrinking treasury assets and ongoing spending requirements.
"We do not think that the PIF will stop at $7 billion," Pascal Bode, a strategist at Morgan Stanley, said ...