Saudi Arabia’s PIF secures $5bn loan covered by K-SURE

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), secured a $5bn syndicated loan from a group of nine banks in a deal that involves the Korean export credit agency to boost trade between the kingdom and South Korea.

The sovereign fund agreed to the initial $3bn loan with a tenor of 13 years with Korea Trade Insurance Corporation (K-SURE) and has the option to boost it to $5bn – subject to pre-agreed terms and conditions.

PIF said the transaction will mark its first financing covered by an export credit agency, as the fund continues to diversify its sources of funding.

The financing follows PIF’s $3.5bn debut sukuk sale in October, two green bond issuances worth $8.5bn in February – including the first-ever century green bond and the first-ever green bond issued by a sovereign wealth fund – and a $17bn corporate loan in 2022.

Loans and debt instruments are one of PIF’s main sources of funding, the fund said in a statement, adding that other sources include retained earnings from investments, capital injections from the government and assets transferred by the government.

PIF is rated A1 by Moody’s with a positive outlook and A+ by Fitch Ratings with a stable outlook.

“The financing is part of PIF’s four primary sources of funding and strengthens economic ties between Saudi Arabian and South Korean businesses,” said Fahad AlSaif, head of the Global Capital Finance Division at PIF.

AlSaif highlighted that the collaboration between PIF and K-SURE underscores the Saudi sovereign fund’s commitment to fostering institutional partnerships.

The two entities previously signed an MoU in March 2022 in which they expressed their mutual intention to strengthen their partnership and cooperation.

The partnership seeks to promote the export of Korean goods and services into various projects and subsidiaries either partially or fully owned by the fund.

PIF fosters economic growth

Meanwhile, PIF is the chosen vehicle of Saudi Crown Prince and Prime Minister Mohammed bin Salman to drive the kingdom’s economic diversification agenda under Vision 2030.

Over the years, the fund has launched 87 companies while creating more than half a million direct and indirect jobs.

The $700bn sovereign wealth fund has been creating companies across a wide range of industries as it takes on an increasingly assertive role in diversifying the domestic economy away from oil.

PIF struck a share purchase agreement in November to acquire a 10 per cent stake in TOPCO, the holding company of Heathrow Airport Holdings, from Ferrovial. The fund said its investment in Heathrow, a world-class airport and a key gateway to the world, is in line with its strategy to support the business as a long-term partner.

Saudi Arabia’s wealth fund owns stakes in tech companies such as ride-hailing firm Uber Technologies, soccer teams including English Premier League’s Newcastle United, electric carmakers Lucid and Ceer and is funding a host of new cities in the desert such as the $500bn futuristic NEOM City and the Red Sea Development Company’s mega tourism project.

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