PIF, Temasek and Mubadala have tapped debt markets to drive their varied growth strategies, whether boosting domestic home ownership or enabling private equity investment. The deals comes amid a slew of bonds by issuers tapping global debt markets at cheap rates as investors utilize high global liquidity in the hunt for higher-yielding assets.
The raising of a US$15 billion credit facility by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is the latest development in a wave of debt raising by state-owned investors.
PIF secured a multi-currency revolving credit facility with a group of 17 banks, which it said gives it access to extra capital that can be deployed quickly when needed. As reported by Reuters, PIF started raising bank debt in 2018 with an US$11 billion facility, followed in 2019 by a US$10 billion loan which it then repaid in 2020. Over the last two years, banks have lent billions to the fund, which is the engine of Crown Prince Mohammed bin Salman’s economic transformation plans for Saudi Arabia, which involve diversification from the oil-based economy.
The debt raising comes as PIF subsidiary the Saudi Real Estate Refinance Company (SRC) announced US$1.07 billion in long-term sukuk issuances, providing liquidity to the Kingdom’s housing market. The SRC was established by the PIF in 2017 to catalyze affordable home financing solutions. This converged with Saudi Arabia’s Vision 2030 plan in which the government aims to increase home ownership in the Kingdom to 70%, up from 45% in 2017.
Meanwhile, Singapore's Temasek and its wholly owned Azalea Asset Management sold the fourth iteration of the Astrea collateralized fund obligation (CFO), raising more than US$450 million from the institutional portion of the deal. Each Astrea transaction has a portfolio of more than 33 private equity funds with exposures to a large number of investee companies. Astrea VI is more oriented to IT, healthcare and financial services than the previous fund and over half of allocations are to North America. The tilt towards these segments and geographies indicates Temasek's orientation towards segments that are viewed as high growth areas, as the global economy adjusts to the disruption caused by the pandemic.
PIF's Middle Eastern stablemate Abu Dhabi state fund Mubadala recently launched two-tranche bonds worth US$1.32 billion comprising six- and 13-year paper, via subsidiary Mamoura Diversified Global Holding. Mubadala issued EUR600 million in six-year notes at 65 basis points (bps) over mid-swaps and EUR500 million in 13-year bonds at 90 bps over mid-swaps.