Saudi wealth fund to raise $5.5 bln with second green bond sale

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Saudi Arabia’s sovereign Public Investment Fund (PIF) is set to raise $5.5 billion through its second sale of green bonds in four months, for which orders topped $32.5 billion, one of the banks running the deal said on Tuesday.

The wealth fund was set to raise $1.75 billion in seven-year paper at 115 basis points (bps) over US Treasuries (UST), $2 billion in a 12-year tranche at 145 bps over UST and $1.75 billion in 30-year bonds at 185 bps over UST, the bank said.

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PIF is the chosen vehicle of Crown Prince Mohammed bin Salman to drive an economic agenda aimed at cutting reliance on oil.

The wealth fund has raised tens of billions, including a $17 billion loan in November, to fund a mammoth investment program to create new industries and jobs, including building a planned futuristic city in the desert known as NEOM.

Orders for the seven-year notes topped $15.2 billion, more than $9.8 billion for the 12-year and over $7.5 billion for the 30-year paper, one of the lead banks said.

Initial price guidance was around 145 bps over 3.5 percent UST for the seven-year notes, around 175 bps over 4.125 percent UST for the 12-year bonds and around 215 bps over 3 percent UST for the 30-year tranche, a bank document earlier showed.

Goldman Sachs, JPMorgan and Standard Chartered Bank were hired as global coordinators for the debt sale expected to price later on Tuesday, the bank document showed. Each tranche will be of benchmark size, which typically means at least $500 million.

Also on the deal are BofA Securities, BNP Paribas, Citi, First Abu Dhabi Bank, HSBC and Morgan Stanley as active bookrunners, as well as Credit Agricole, GIB Capital, ICBC International Securities, Mizuho, SMBC Nikko and Societe Generale as passive bookrunners.

PIF, which manages more than $600 billion in assets, raised $3 billion in October with its debut bond sale, which was also a green issue. That sale comprised tranches of five, 10 and 100 years - the first green bond of that tenor.

PIF expects to invest more than $10 billion by 2026 in eligible green projects, including renewable energy, clean transport and sustainable water management, an investor presentation for the bonds sold in October showed.

By comparison, the fund has said it would invest about $40 billion domestically each year through 2025.

Read more: Saudi Aramco to build Zoom’s first global data center in Saudi Arabia

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