Saudi plans $11 bn syndicated loan to fuel investment plans

Kingdom appointed Chinese bank ICBC coordinator and bookrunner
Saudi plans $11 bn syndicated loan to fuel investment plans
Saudi (Photo Credit: Reuters)

According to a report by Bloomberg, Saudi Arabia is planning to raise $11 billion through a syndicated loan in order to finance its investment plans.

The Kingdom’s Ministry of Finance has appointed Industrial & Commercial Bank of China Ltd (ICBC) as the coordinator and bookrunner for this long-term senior unsecured loan, as stated by individuals familiar with the matter.

Read more: Saudi banks see marginal profitability gains in Q2

The loan has a duration of 10 years. It offers an interest rate of 100 basis points above the Secured Overnight Financing Rate. The Secured Overnight Financing Rate is the typical reference rate for borrowing in U.S. dollars.

ICBC has extended invitations to other banks to participate in the loan and has requested interested parties to respond before mid-October, as reported by Bloomberg.

The economic plan known as Vision 2030 is personally led by Saudi Crown Prince Mohammed bin Salman. It aims to diversify Saudi Arabia’s economy into sectors like tourism. The strategy also focuses on developing significant infrastructure projects and fostering growth in the financial and private sectors.

The successful achievement of Vision 2030’s goals requires substantial investments, which are entrusted to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund.

$3.3 trn

Saudi has implemented more than 600 economic reforms since the introduction of the Vision 2030 initiative. These reforms aim to attract a total of SAR12.4 trillion ($3.3 trillion) in cumulative investments, including SAR1.8 trillion in foreign direct investment (FDI), from 2021 to 2030 as part of the National Investment Strategy.

FDI increase

Saudi Arabia managed to achieve an impressive 18 percent increase in FDI in 2020. This is despite the global decline of 35 percent in FDI caused by the pandemic. This indicates the Kingdom’s resilience and attractiveness as an investment destination during challenging times.

In 2021, FDI flow experienced a significant surge, increasing by 257 percent compared to the previous year. This remarkable growth was primarily driven by a substantial infrastructure deal worth SAR46.5 billion. The transaction was successfully concluded by Aramco in the second quarter of 2021. It was achieved through collaboration with a global investor consortium.

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