Sign in
Strong investor appetite for PIF’s first debt sale in 2024: The Public Investment Fund took a USD 5 bn senior unsecured bond issuance to market yesterday, Bloomberg reported.
The offering was 5x oversubscribed, with bankers taking orders worth USD 27 bn, an unnamed source told the business information service.
A three-tranche offering: The final yield for the five-year note was 35 basis points lower than the initial price guidance of 150 bps above counterpart US Treasuries. Longer tranches of ten-year and 30-year notes carried yields at 30 bps below the initial price.
The PIF has not released information about how it plans to use the funds, but we expect it will simply add the cash to its warchest as it looks to push ahead with an aggressive investment plan this year and next.
PIF’s war chest is well-stocked: The fund closed in October a USD 3.5 bn global sukuk issuance, two green bond offerings totaling USD 8.5 bn between 2022 and 2023, and lined up a USD 17 bn corporate facility in 2022. The fund aims to invest as much as USD 40 bn every year in the local economy as part of a drive to diversify away from oil.
In context: Many countries are taking advantage of good investor appetite and the prospect of lower interest rates to lock in fresh capital. The National Debt Management Center closed a USD 12 bn issuance two weeks ago, its largest issuance since 2017. The offering was 2.5x oversubscribed, with banks taking orders worth USD 30 bn. Poland, Mexico, and Indonesia have made similar moves to tap global debt investors.
REMEMBER: Market conditions will inform the state’s 2024 financing plan: The National Debt Management Center (NDMC) will continue to “identify and pursue favorable market” conditions with expectations that up to 35% of the total financing needs will come from the domestic debt market, according to NDMC’s borrowing plan. Some 40% will be covered through tapping international debt markets, and the government Alternative Funding (GAF) will cover up to 50%.
Advisors: Citigroup, Goldman Sachs and JP Morgan Chase were joint global coordinators on the transaction.
