PIF launches commercial paper program to diversify funding sources
RIYADH: Saudi Arabia's Public Investment Fund has launched its first commercial paper program, introducing a new tool to diversify its funding sources and enhance short-term liquidity management.
A commercial paper is a debt instrument used to raise short-term funding, offering faster access to funds than traditional loans. It is widely used in global financial markets, offering PIF greater flexibility in meeting its needs while aligning with its dynamic investment priorities.
The CP program will enable PIF to issue short-term debt through offshore special-purpose vehicles, enhancing its liquidity management and complementing its long-term capital-raising initiatives.
According to a press release, the initiative, which includes US and Euro CP sub-programs, has received top-tier credit ratings of Prime-1 from Moody's and F1+ from Fitch, underscoring its strong financial standing.
PIF has consistently demonstrated its ability to pioneer new financial instruments. In 2022, it became the first sovereign wealth fund globally to issue a green bond, including a landmark century green bond, followed by a successful $3.5 billion sukuk issuance, according to the fund.
PIF's Head of Global Capital Finance and Investment Strategy and Economic Insights, Fahad Al-Saif, emphasized the program's role in strengthening the fund's resilient and adaptive financial framework.
'The establishment of our CP program reflects the continued strength and depth of PIF's capital raising strategy; one that is dynamic, resilient, and fit for purpose, aligning funding solutions with our long-term investment priorities,' he said.
In a press release, Moody's Ratings said that the programs will operate under newly established special purpose vehicles, CPDE Investment Co. and CPNL Investment Limited.
'PIF has an excellent liquidity profile,' Moody's said in its rating rationale, citing the fund's cash reserves of SR106 billion ($28 billion) and undrawn credit facilities as key strengths.
According to the agency, the USCP program will support maturities of up to 397 days, while the ECP program will cover maturities of up to 364 days, with proceeds earmarked for general corporate purposes.
PIF is Saudi Arabia's primary investment arm, tasked with advancing economic transformation under Vision 2030. Through strategic partnerships and investments, the fund aims to build future-ready industries, create employment opportunities, and promote sustainable development.
As the driving force behind Saudi Arabia's Vision 2030, PIF has established 103 companies since 2017, fostering economic diversification and sustainability.
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