Saudi Arabia’s wealth fund is set to tap a broader array of investors and pursue debt sales through its subsidiaries, as it grapples with the scale of the kingdom’s spending ambitions.
The Public Investment Fund is weighing a debut euro-denominated bond this year and plans to tap onshore U.S. investors for the first time, according to people familiar with the matter. It’s also encouraging subsidiaries to borrow independently, with Neom Co. and AviLease among firms potentially issuing debt, some of the people said, declining to be identified discussing confidential information.
These plans represent a step toward the $925 billion entity’s new long-term financing strategy, which seeks to limit the need for additional funding from the Saudi government, one of the people said.
PIF, the main entity tasked with Crown Prince Mohammed bin Salman’s Vision 2030 program, has already raised $4 billion from debt markets in January. Its mining unit followed with a $1.25 billion Islamic bond last month.
Any new sales would add to the $14.3 billion raised by the sovereign so far this year, and extend the borrowing spree that’s made the kingdom a top issuer in emerging markets in the past two years.
Representatives for the PIF declined to comment.
The kingdom’s spending over the next few years will also include outlays for events like the FIFA World Cup in 2034. Those commitments, against the backdrop of sluggish foreign direct investment, low oil prices and persistent budget deficits, have already prompted the government to start re-prioritizing projects.
Saudi Arabia needs the price of oil to be around $108 per barrel to fund its spending once domestic investments by the PIF are taken into account, according to estimates from Bloomberg Economics. That’s significantly higher than current prices of about $70 a barrel.
Further complicating the picture is a pledge by the crown prince, who also chairs the fund, to engage in $600 billion worth of trade and investment with the U.S. over the next four years. President Donald Trump has asked the kingdom to plow in even more, heightening pressure to secure additional sources of cash — if these deals are to materialize.
