Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, expects to raise $1.25 billion from sale of U.S. dollar-denominated 7-year Islamic bonds, or sukuk, an arranging bank document showed on Wednesday.
The spread for the debt has been set at 110 basis points over U.S. Treasuries, narrower than 145 bps over the same benchmark released earlier in the day. The debt has attracted over $9 billion in orders, the lead bank document said.
The sovereign wealth fund tapped bond investors for the second time this year as it continues to pour billions of dollars into an ambitious programme to wean the economy off oil.
Saudi Arabia, with its wealth linked inextricably to oil revenue, faces mounting pressure to raise debt or cut spending after a plunge in crude prices, complicating plans to fund an ambitious agenda to diversify its economy.
The International Monetary Fund and economists estimate Riyadh needs oil prices of over $90 a barrel to balance its budget. Benchmark Brent was trading at 63.48 a barrel at around 1300 GMT.
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To make things even more complicated, Saudi Crown Prince Mohammed bin Salman — who also chairs the fund — has promised to do $600 billion in trade and investment with the U.S. over the next four years. U.S. President Donald Trump has asked Saudi Arabia to invest $1 trillion in the United States.
PIF last tapped the debt markets in January, raising $4 billion from a two-tranche deal.
Last week, Reuters reported through sources that Gulf issuers, including Saudi Arabia’s $925 billion sovereign wealth fund, are preparing a series of bond offerings despite market volatility caused by Trump’s tariff policies.
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