Saudi Arabia’s Public Investment Fund takes out its first ever $11 billion international syndicated loan

The development assumes strategic importance since the development is part of a package aimed at diversifying Saudi Arabia’s oil-export driven economy.

In a development that marks the first commercial borrowing by Saudi Arabia’s top sovereign wealth fund, the Kingdom’s Public Investment Fund (PIF) stated it had taken out an $11 billion international syndicated loan.

“This is the first step in incorporating loans and debt instruments into PIF’s long-term funding strategy,” said Yasir al-Rumayyan, the fund’s managing director in a statement.

He went on to add, the PIF would “develop into one of the most prominent users of banking services in the region”.

The PIF, which is set to play a vibrant role in the Kingdom’s economic development as it tries to wean away its industry from its crude-oil export driven economy, said it would use the funds for “general corporate purposes”.

The fund, with assets estimated at over $250 billion, originally sought to raise between $6 billion and $8 billion, according to sources, but Rumayyan said the size had been increased because of strong interest among banks and favorable pricing.

Although Yasir al-Rumayyan did not provide any further details regarding loan amount, banking sources had previously said it would have a five-year maturity and be structured as a club loan, with 14 to 16 banks making commitments of up to $1 billion at three different levels.

As per a source with direct knowledge of the matter, the PIF would pay a margin of 0.75%, or 75 basis points, over the London Interbank Offered Rate on the loan.

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