Riyadh, Saudi Arabia – Global credit agency Fitch Ratings has reaffirmed Saudi Arabia’s Public Investment Fund’s (PIF) long-term foreign- and local-currency issuer default ratings at “A+” with a stable outlook.
In its assessment, Fitch highlighted the PIF’s robust financial autonomy and its critical role in bolstering Saudi Arabia’s non-oil gross domestic product through diverse investments across local and international markets. The agency highlighted the fund’s strong ownership and control, noting its exemption from a bankruptcy regime and the potential for a Royal Decree to revert its assets and liabilities to the state.
Regarding government support, Fitch underlined the transfer of 8 percent of the Saudi government’s shares in Aramco to the PIF, anticipating an enhancement of its dividend base and increased governmental backing. The agency expected the Saudi government to forgo the PIF’s dividend distribution for 2023, aligning with Vision 2030 objectives to bolster the fund and its subsidiaries.
Fitch stressed the PIF’s role as Saudi Arabia’s sole sovereign wealth fund, attributing significant socio-political implications to its operations. The fund’s contribution of 1.8 million jobs across strategic sectors such as telecommunications, information technology, financial services, food and agriculture, transport, and logistics was highlighted.
The agency notably expressed the far-reaching consequences of a potential PIF default, foreseeing adverse effects on Saudi Arabia’s Vision 2030 objectives and substantial political repercussions due to the state’s involvement in the fund’s activities.
“Fitch therefore deems a PIF default would endanger the Government of Saudi Arabia’s strategy to promote the non-oil sector and to grow the nation’s wealth under Vision 2030 and lead to very significant political repercussions, particularly given the state’s high accountability in PIF’s activities,” the assessment noted.
Looking ahead, Fitch anticipates the PIF’s evolution as a benchmark issuer for Saudi Arabia, particularly as it taps into international capital markets through trust certificate issuance programs, supplemented by capital funding from the government during its growth phase. Fitch also affirmed the PIF’s trust issuance program at “A+.”
In its 2022 annual report, the PIF disclosed assets worth SR2.23 trillion ($595 billion) and the establishment of 70 companies, 25 of which were initiated in 2022, including entities like Saudi Coffee Co. and Halal Products Development Co.