PIF given ‘very strong’ rating and outlook by Fitch

Fitch Ratings has affirmed the long-term foreign- and local-currency issuer default ratings (IDR) of the Public Investment Fund (PIF) at ‘A+’, giving the Saudi soveriegn wealth fund a stable outlook.

The affirmation reflects Fitch’s unchanged assessment of “very strong” status, ownership and control, support track record and socio-political implications of default.

Fitch does not expect any changes to PIF’s status, ownership and control over the medium term, with the fund exempted from a bankruptcy regime.

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Since PIF’s reorganisation under the Council of Economic Development Affairs, government support has totalled SAR632.8 billion ($168.73 billion) or 38 percent of the fund’s consolidated total assets.

Fitch forecasts the government’s “very strong” financial commitment will continue, as underlined by the government’s 2023 budget which outlined plans to transfer fiscal surpluses to support national funds such as the PIF.

The government’s recent transfer of a total 8 percent equity stake in Saudi Aramco during 2022 and 2023, with a four percent equity stake to PIF and a four percent equity stake to PIF’s subsidiary Sanabil, is expected to bolster PIF’s dividends base.

The ratings agency expects the government to waive PIF’s dividend payment, aiming to deploy more funds into the fund and subsidiaries to execute its policy mandate under Vision 2030.

PIF is expected to gradually evolve as a reference issuer of Arabia for Euro medium-term notes as it continues to tap international capital markets, Fitch Ratings said in a report.