Saudi investments in US bonds increase to $170bn

The Institute of International Finance estimates the Public Investment Fund's assets at around $300 billion
Saudi investments in US bonds increase to $170bn
By Bernd Debusmann Jr
Thu 13 Jun 2019 09:53 AM

Saudi Arabia has increased its exposure to US treasuries and upped its bond holdings to a peak of $170 billion, according to a new report by the Institute of International Finance (IIF).

The report noted that Saudi Arabia’s Public Investment Fund (PIF) is close to reaching its target of increasing assets to $400 billion by 2020.

“We now estimate PIF’s assets at around $300 billion, of which one-fourth are invested abroad,” Garbis Iradian, IIF’s chief economist for the Middle East and North Africa was quoted as saying in the National.

Saudi plans call for the government to deposit proceeds from the sale of state assets to the PIF, which in turn will help boost foreign investments.

The PIF and Saudi Arabia’s pension fund, the General Organisation for Social Insurance (Gosi) are primarily concentrated on investments in US Bonds.

“The increase in Saudi holdings of US bonds largely reflects the restructuring of the investment portfolios” of Gosi and the PIF, IIF said, adding that its “appetite for US bonds coincided with relatively higher US yields and unfavourable investment sentiment in EMS [emerging markets] and the Eurozone.”

Additionally, the composition of the kingdom’s assets holdings also demonstrates that Saudi Arabia is moving away from the euro and pound-denominated holdings, according to the IIF.

The IIF’s data shows that Riyadh’s holding of dollar-denominated assets stands at about 80 percent, as it has since 2014.

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