Saudi’s PIF investments to bolster corporate credit growth: S&P

By Amirtha P S, Desk Reporter
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Investments made by Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF) will support credit growth among companies in the Kingdom, as per rating agency S&P Global Ratings.

One of the largest sovereign wealth funds in the world, PIF is a $400 billion investment vehicle that holds a key role in the economic reforms made by the country to transform its oil-dependent economy. The fund plans to invest at least $40 billion annually into the local economy until 2025 and to increase its assets to $1 trillion by that date.

“The Public Investment Fund has recently announced investment initiatives that we expect will spur corporate credit growth, mostly in construction-related industries. This will offset the gradual lifting of support aimed at easing the impact of the pandemic,” S&P said.

The Saudi central bank (SAMA) recently stated that it had extended a deferred payment program to support private sector financing for an additional three months until June 30 as part of its measures to reduce the impact of the coronavirus pandemic on the economy. 

Further, SAMA stated about a guaranteed financing program that had been extended for an additional year until March 14, 2022, to support small and medium enterprises.

The domestic credit growth in the biggest Arab economy is expected to stay strong this and next year after a 14 percent year-on-year increase in 2020 and part of the growth is following the growing demand for housing from Saudi nationals, which has boosted mortgage growth, S&P stated.

According to S&P, in the coming few years, the mortgage portfolios in the Kingdom will expand by about 30 percent a year.

Related: Saudi Arabia’s credit support for SMEs surged in 2020 amid COVID-19: SAMA