PIF signs first funding deal with an export credit agency

Saudi Arabia’s Public Investment Fund (PIF) has signed a financing agreement to raise a term loan of up to $5 billion from a syndicate of nine international lenders, which will be covered by Korea Trade Insurance Corporation (K-Sure).

The financing carries a tenor of 13 years and will initially be sized at $3 billion, with an option to increase to $5 billion, PIF said in a statement.

The transaction marks PIF’s first financing covered by an export credit agency, as the state-backed wealth fund continues to diversify its funding sources.

• PIF given ‘very strong’ rating and outlook by Fitch
• PIF’s sukuk may test investor appetite for Middle East
• PIF to open Indian office as part of $100bn investment drive

PIF and K-Sure signed a memorandum of understanding in March 2022 to promote the export of South Korean goods and services into various projects and subsidiaries either partially or wholly owned by the sovereign fund.

Fahad AlSaif, head of the global capital finance division at PIF, stated that the financing was part of the fund’s four primary funding sources and strengthens economic ties between Saudi Arabian and South Korean businesses.

Inho Lee, president of K-Sure, added that South Korean companies have gained technological and financial competitiveness to increase orders.

The financing follows PIF’s recent international sukuk issuance worth $3.5 billion, two green bond issuances of $8.5 billion and a $17 billion corporate loan in 2022.

Loans and debt instruments are one of PIF’s primary sources of funding. Others include retained earnings from investments, capital injections from government and government assets transferred to the sovereign fund.