PIF investments to support corporate credit growth, says S&P

Logo of Public Investment Fund

Investments by Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), will support credit growth among companies in the Kingdom, Reuters reported, citing credit rating agency Standard & Poor's Global.

The PIF manages $400 billion in investments and is at the center of the economic reforms aimed at transforming the oil-dependent Saudi economy.

The fund plans to pump at least SAR 150 billion ($40 billion) into the local economy every year until 2025, with its assets increasing to SAR 4 trillion by that date.

"The PIF has recently announced investment initiatives that we expect will spur corporate credit growth, mostly in construction-related industries," S&P said.

"This will offset the gradual lifting of support aimed at easing the impact of the pandemic," it added.

On Sunday, March 7, the Saudi Central Bank said it had extended a deferred payment programme to support private sector financing for an additional three months until June 30 as part of measures to mitigate the impact of the coronavirus pandemic on the economy.

It also said a guaranteed financing programme had been extended for an additional year, until March 14, 2022, to support small and medium enterprises.

According to S&P, domestic credit growth in Saudi Arabia is expected to stay strong the current and the next year after a 14% year-on-year (YoY) increase in 2020.

Part of the growth is due to rising demand for housing from Saudi nationals, which has boosted mortgage growth, it added.

“Over the next couple of years, we forecast that mortgage portfolios will expand by about 30% a year,” S&P said.