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RIYADH: Saudi Arabia’s Public Investment Fund is embracing a calibrated, multi-instrument approach to debt issuance described by Global SWF as a model of “precision finance.”

According to the research firm, the purpose — following the issuance of the commercial paper program in June — is to align PIF’s funding tools with investment timelines, liquidity needs, and investor targeting, while reinforcing financial discipline across its expanding portfolio.

In its report, Global SWF noted that PIF is moving away from a singular focus on long-term mega-bond issuances and toward a more agile debt framework that includes commercial paper, sukuk, green bonds, and multi-tranche conventional bonds.

This strategy is designed not just to raise capital, but to do so with precision, which is matching maturities to project lifecycles and diversifying funding sources across global markets.

Global SWF highlighted that PIF’s latest move, completes a full-spectrum debt portfolio that now includes ultra-short to ultra-long maturity instruments.

The commercial paper, issued in US dollar and euro denominations via offshore special-purpose vehicles, secured the highest short-term credit ratings available: Prime-1 from Moody’s and F1+ from Fitch.

These ratings reflect exceptional credit quality and grant PIF access to deep liquidity pools among institutional investors such as money market funds.

The commercial paper program is a critical addition to a borrowing strategy that also includes a $3 billion 100-year green bond issued in October 2022, a $5.5 billion green bond in February 2023, a $3.5 billion sukuk in October 2023, and a series of multi-tranche bonds and sukuk issued through early 2025. 

With each offering, PIF has tailored tenor, currency, and structure to match specific financial and investor objectives.

The evolution of PIF’s financial strategy is closely tied to its broader transformation under Vision 2030. Since 2016, the fund has grown its assets under management from $160 billion to $941.3 billion, according to the latest Vision 2030 Annual Report. It has now increased its 2030 AUM target to $2.67 trillion, reflecting its expanded mandate and rising international profile.

PIF’s investment strategy is balanced between domestic development and global positioning. About 40 percent of its assets are allocated to Saudi-based companies and projects, while the remaining 60 percent target international sectors such as technology, logistics, mining, and tourism.

According to the Vision 2030 report, PIF’s initiatives have helped create 1.1 million jobs, attracted over $37 billion in private capital, and grown the number of PIF-established companies from 45 in 2021 to 93 in 2024.

A strategic departure from Gulf norms

While other sovereign wealth funds such as Norway’s NBIM remain entirely debt-free, and Singapore’s Temasek or China Investment Corporation borrow sparingly, PIF has opted for a hybrid model, one that combines government equity injections with strategic use of debt instruments.

According to Global SWF, this is not a matter of opportunistic borrowing. Rather, PIF is practicing deliberate asset-liability matching which focuses on issuing long-dated bonds to support giga-projects like NEOM or The Line, while using short-term debt for working capital needs and market-timed investments.

Sukuk offerings help tap into regional Islamic finance liquidity, and green bonds target environmental, social, and governance-focused global capital.

This differentiated approach allows PIF to broaden its investor base while keeping funding costs aligned with the nature and duration of its projects.

Why ratings matter

The fund’s credibility is bolstered by strong long-term credit ratings: Aa3 from Moody’s and A+ from Fitch. This has allowed it to secure favorable terms on successive bond offerings and confirmed that PIF is regarded as an exceptionally low-risk short-term borrower, giving it seamless access to institutional liquidity globally.

Global SWF emphasized that the ratings, combined with diverse issuance formats, position PIF among a small group of sovereign wealth funds with the internal capability to manage complex, multi-layered debt programs.

Saudi Arabia is currently navigating a tighter fiscal environment, with a projected 2.3 percent budget deficit in 2025 and a more disciplined approach to public spending.

In this context, PIF’s access to capital markets is more than just financial, according to Global SWF, it serves as a strategic bridge that enables ongoing project execution without placing undue pressure on state reserves.

The firm noted that the fund’s recent bond and sukuk calendar illustrates a sequenced and diversified funding plan, rather than reliance on a single issuance type. This is especially important as global interest rates remain volatile and investors increasingly scrutinize sovereign debt sustainability.

Rather than treating debt as a one-off tool, the fund is deploying it systematically, by tenor, purpose, and investor group, to support a $2.6 trillion vision for economic diversification and global investment leadership.

As the Kingdom approaches the final stretch of Vision 2030 implementation, PIF’s capital strategy offers a case study in how sovereign wealth funds can combine financial discipline, market sophistication, and national ambition under a unified financing framework.

SINGAPORE: Oil prices headed for their steepest weekly decline since March 2023 on Friday, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate.

Brent crude futures rose 35 cents, or 0.52 percent, to $68.08 a barrel by 7:29 a.m. Saudi time while US West Texas Intermediate crude gained 40 cents, or 0.61 percent, to $65.64.

That put both contracts on course for a weekly fall of about 12 percent.

The benchmarks are now back at the levels they were at before Isreal began the conflict by firing missiles at Iranian military and nuclear targets on June 13.

This week began with prices hitting a five-month high after the US attacked Iranian nuclear sites at the weekend, before slumping to their lowest in over a week on Tuesday when US President Donald Trump announced an Iran-Israel ceasefire.

At present, traders and analysts said they could see no material impact from the crisis on oil flow.

“Absent the threat of significant supply disruption, we still view oil as fundamentally oversupplied, with our 2025 balances indicating a roughly 2.1 million barrels per day (bpd) surplus,” Macquarie analysts wrote in a research note on Thursday.

The analysts forecast WTI to average around $67 a barrel this year and $60 next year, raising each forecast by $2 after factoring in a geopolitical risk premium.

Small gains in prices later in the week came as US government data showed crude oil and fuel inventories fell a week earlier, with refining activity and demand rising.

“The market is starting to digest the fact that crude oil inventories are very tight all of a sudden,” said Phil Flynn, senior analyst with the Price Futures Group.

Also supporting prices was a Wall Street Journal report saying Trump planned to choose the next Federal Reserve chief earlier than usual. That fueled fresh bets on US interest rate cuts which would typically stimulate demand for oil.