Public Investment Fund taps debt markets for the first time in 2026
Orders exceed $11 billion
Gulf borrowers expected to be big bond and sukuk issuers in 2026, Fitch says
Adds launch size and spread, and background throughout
ABU DHABI, Jan 21 (Reuters) - Saudi Arabia's Public Investment Fund tapped global debt markets for the first time this year with a $2 billion 10-year Islamic bond, or sukuk, drawing substantial demand from investors on Wednesday.
The almost $1 trillion sovereign wealth fund has been tasked with executing the kingdom's massive economic transformation blueprint, known as Vision 2030, which requires hundreds of billions in investment, in a bid to expand the private sector, create jobs for citizens and wean the economy off hydrocarbon income.
Order books for the sukuk topped $11 billion, indicating strong appetite for the paper, and allowed the PIF to launch at a tighter spread of 85 basis points over U.S. Treasuries, from an indicative spread of 120 basis points earlier in the day, fixed income news service IFR reported.
Earlier this month, Saudi Arabia sold $11.5 billion in a four-part bond, paving the way for other Saudi borrowers to tap debt markets, with around $20 billion in overall issuance from the kingdom already so far this year.
The government's 2026 annual borrowing plan foresees financing needs of about 217 billion riyals ($57.86 billion), intended to cover a projected budget deficit of around $44 billion this year, as well as about $13.87 billion in repayments.
Fitch Ratings said it expected Gulf Cooperation Council countries, including Saudi Arabia, to remain among the largest emerging-market U.S. dollar debt and sukuk issuers in 2026 "despite global and regional shocks".
It forecast GCC debt capital markets to exceed $1.25 trillion this year, driven by diversification plans, refinancing needs, funding deficits and project pipelines.
Citi, JPMorgan and Standard Chartered were global coordinators for the PIF bond. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Bank of China, Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, GIB Capital, HSBC, ICBC, Mashreq Bank and Sharjah Islamic Bank acted as joint lead managers and bookrunners.
(Reporting by Federico Maccioni and Rachna Uppal; Additional reporting by Amna Mariyam; Editing by Louise Heavens, Bernadette Baum and Alison Williams)
((rachna.uppal@thomsonreuters.com;))
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