Saudi Arabia's PIF agrees to terms for $10bn loan - report

10 banks have committed to provide the short-term loan to the Public Investment Fund, according to the Financial Times
Saudi Arabia's PIF agrees to terms for $10bn loan - report
The loan is expected to be paid back later in 2019 when Saudi Aramco makes a first payment to the fund of the $69 billion is set to pay PIF in exchange for its majority stake in petrochemicals group Sabic.
By Bernd Debusmann Jr
Mon 15 Jul 2019 03:16 PM

Saudi Arabia’s Public Investment Fund has reportedly agreed to initial terms for a $10 billion loan from a group of lenders including Bank of America Merrill Lynch and Citigroup, according to a report in the Financial Times.

Citing people briefed on the transaction, the FT said that 10 banks have committed to provide the short-term loan to the PIF.

The loan is expected to be paid back later in 2019 when Saudi Aramco makes a first payment to the fund of the $69 billion is set to pay PIF in exchange for its majority stake in petrochemicals group Sabic.

The FT is reported that the PIF is in “advanced discussions” over the loan. Other banks involved reportedly include HSBC, JPMorgan, Mizuho, MUFG, Standard Chartered Bank and Sumitomo Mitsui.

The process is subject to ratification through requests for proposals that the PIF is expected to send to the banks this week.

The PIF has previously stated that it plans to raise assets under management from $300 to $400 billion by the end of the decade to eventually hit $2 trillion by 2030.

In April, when preliminary talks on the loan was first reported, a spokesperson for the PIF said its funding strategy includes “four sources of finance, including capital injections and asset transfers by the government, retained investment returns, loans and debt instruments.”

A month later, the PIF’s managing director, Yasir Bin Othman, confirmed to CNBC but the sovereign wealth fund would tap the debt market twice by the end of 2019.

“We asked for $8 billion syndicate loan and we got an amazing response from the market. We got like $24 [billion]…that was sometime last year,” he said. “This year, we will do at least two debt raises.”

Bin Othman added that he believed that the would raise “north of $8 or $10 billion”, which “doesn’t even represent 5 percent of our AUM [assets under management].”

“Our target is to go between 15 percent to 20 percent,” he said. “So, we’ll continue on raising debt.”

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