Saudi sovereign wealth fund finalises terms on $10 billion loan

Saudi Arabia’s sovereign wealth fund finalised the terms of a $10 billion loan it’s seeking to raise from a group of banks, according to people familiar with the matter.

The Public Investment Fund will pay 30 basis points over the London Interbank Offered Rate for the bridge loan — less than half the rate of its first borrowing, the people said, asking not to be identified because the information is private. The financing will have a one-year tenor with an option to extend by an additional 12 months, they said.

The fund received more than $20 billion of offers from the banks, the people said. The loan will provide some liquidity for the PIF ahead of its Saudi Basic Industries Corp. stake sale, said one of the people. A spokesman for the PIF declined to comment.

The fund was seeking to raise as much as $8 billion when it started talks with lenders in April, people said at the time. The PIF will repay the loan with the $70.1 billion it will get from the sale of its 70% holding in Sabic to Saudi Aramco. The state-owned oil company will pay for half of the stake this year and the rest over the next two years.

When the PIF raised $11 billion from banks in its first loan last year it agreed to pay 75 basis points over Libor, although that deal has a tenor of five years.

The fund is a central part of the government’s effort to wean the economy away from oil under a plan known as Vision 2030. The fund aims to control more than $2 trillion by that date and currently has assets of about $320 billion, according to the Sovereign Wealth Fund Institute.

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