Bloomberg has quoted well-informed sources as confirming that Saudi Arabia’s sovereign wealth fund is close to refinancing an $11 billion loan and significantly increasing the size of the borrowing.
$11 Billion Loan vs Oil Revenues
The Public Investment Fund will use the bulk of the potentially bigger loan to refinance debt that’s due to mature next year, the sources told Bloomberg, saying that final terms have yet to be agreed.
The $620 billion wealth fund, which is the centre of Saudi Arabia’s 2030 vision being spearheaded by Crown Prince Mohammed bin Salman, is borrowing even as soaring crude prices are set to give the kingdom its first budget surplus in almost a decade.
Last Thursday, Reuters revealed that Saudi Arabia’s $620 billion sovereign wealth fund, the Public Investment Fund (PIF), is expected to tap international debt markets for a debut green bonds issue as soon as next week.
Reuters reported in July last year that PIF was setting up a financing framework that would allow it to raise green bonds.
The loan aims at filling the hole left by the delayed listing of state energy group Saudi Aramco and providing financing for crown prince Mohammed bin Salman’s ambitious projects.
As many as 16 banks are expected to participate in the syndicated loan.
MBS’ high spending
Over the past few years, PIF has become a global investment powerhouse and the world’s most impactful investor, driving the economic transformation of the Kingdom and enabling the purchase of prominent international companies, mainly US-based firms, in addition to soccer clubs, including England’s Newcastle United. RIF also invested $200 million into the LIV Golf Asian Tour.
Power behind the Throne
Mohammed bin Salman’s power increased with his appointment as PIF’s Chairman especially after his reform plans to wean the economy off oil. His worldwide power was further increased after the Ritz Carlton incident in 2017.
A total of about $107 billion has been recovered as a result of the detention of scores of Saudi royals and businessmen in Riyadh’s Ritz-Carlton hotel in 2017.
Public anger is growing
What did Crown Prince offer to the Saudis? This is how Saudi social media activists reacted to MBS’ economic plans declared since he took office in 2017, holding him responsible for the deteriorating economic situation despite the high oil prices.
Social media activist Turki Al-Shalhoub pointed out that Saudis are no longer able to pay their electricity and water bills.
The activist Dargham Najd shared a video showing a Saudi citizen looking for food in a garbage box.
