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* People * Product * Insights Contact Us Rating Action Commentary FITCH AFFIRMS PUBLIC INVESTMENT FUND AT 'A+'; OUTLOOK STABLE Mon 11 Nov, 2024 - 12:34 ET Fitch Ratings - Warsaw - 11 Nov 2024: Fitch Ratings has affirmed Public Investment Fund's (PIF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'A+' with Stable Outlooks. Fitch has also affirmed PIF's special-purpose vehicle (SPV) GACI First Investment Company's guaranteed EMTN programme ratings and the senior unsecured long-term ratings on its bonds at 'A+'. PIF's trust issuance programme, issued through the trustee SUCI Second Investment Company (SSIC), has also been affirmed at 'A+'. A full list of rating actions is below. Fitch classifies PIF as a government-related entity (GRE) of Saudi Arabia (A+/Stable/F1+) and equalises its ratings with those of the sovereign, considering its significant role in diversifying the national economy. KEY RATING DRIVERS Support Score Assessment 'Virtually certain' We view extraordinary support from Saudi Arabia to PIF as 'Virtually certain', reflecting its maximum support score of 60 under Fitch's GRE Criteria. This reflects a combination of responsibility-to- support and incentive-to-support factors assessment as below. RESPONSIBILITY TO SUPPORT Decision Making and Oversight 'Very Strong' Fitch views PIF as a critical long-term investment fund reporting to the Council of Economic Development Affairs (CEDA) of Saudi Arabia. PIF operates with financial autonomy under Royal Decree M/92, allowing it to execute its investments and operations independently. In alignment with Saudi Arabia's Vision 2030 and PIF's 2021-2025 strategy, PIF serves as a key economic catalyst, driving non-oil GDP growth and investing in a diverse range of sectors both locally and internationally. These investments include high-impact projects that are strategically important to Saudi Arabia. The robust oversight by CEDA ensures that PIF's strategic objectives and operations remain aligned with national priorities. Fitch does not anticipate changes in PIF's decision-making and oversight processes in the medium term. Precedents of Support 'Very Strong' The government has historically supported PIF with monetary and non-monetary contributions, such as equity securities and land transfers. Significant contributions in recent years include substantial cash transfers and shares of Saudi Arabian Oil Company (A+/Stable; PIF directly and indirectly owns 16%). As of 31 March 2024, the total contributions from the government amounted to SAR1,308 billion or 36% of total consolidated assets. This active support is mirrored at the Holdco level, with total equity funding comprising more than 90% of total assets. Fitch expects the government's very strong financial commitment to continue over the forecast period, mainly though further asset transfers, which are likely to bolster PIF's dividends base. INCENTIVES TO SUPPORT Preservation of Government Policy Role 'Very Strong' PIF is central to Saudi Arabia's Vision 2030, aiming to diversify the economy away from oil dependency by investing in various sectors, fostering sustainable growth, job creation, and modernisation. PIF's high global profile and strategic economic importance for the government mean its default would have severe political and economic repercussions for the government. Contagion Risk 'Very Strong' As a high-profile GRE in Saudi Arabia, a default by PIF could materially impair investor confidence in the sovereign's creditworthiness. This could in turn lead to a significant increase in the cost of funding or external debt markets being temporarily cut off for the sovereign. PIF continues to tap international capital markets, notably through the EMTN and trust certificate issuance programmes while receiving capital funding from the government during its growth phase. OPERATING PERFORMANCE PIF's investments span multiple strategic sectors, including aerospace and defence, automotive, real estate, entertainment, leisure and sports, metals and mining, and utilities and renewables. In 2023, PIF focused on enhancing operational efficiency through technological advancements and organisational improvements. Investment projects are financed in balanced proportions through operating income, government contributions, capital recycling, and debt capital markets. PIF experienced substantial growth in 2023, with total assets under management (AuM) increasing by 29% to SAR2.87 trillion from SAR2.23 trillion at end-2022. This was driven by strategic investments in various sectors, including the launch of Diriyah Company, Riyadh Air, and Lifera, among others. DERIVATION SUMMARY Fitch views PIF as a GRE under its GRE Rating Criteria and equalises its ratings with the sovereign's ratings, irrespective of its standalone assessment. This reflects the 'Virtually certain' likelihood of support from the state, given PIF's key role in KSA's strategic agenda. Fitch does not assess PIF's Standalone Credit Profile, due to its very tight operational and financial links with the government. SHORT-TERM RATINGS Under Fitch's GRE Criteria, when an entity's Long-Term IDRs are equalised with the government's IDRs, the Short-Term IDRs are also equalised. We therefore equalise PIF's Short Term IDRs with the Saudi sovereign's. NATIONAL RATINGS PIF's 'A+' Long-Term Local-Currency (LTLC) IDR corresponds to a 'AAA(sau)' rating on the National Ratings Correspondence Scale for Saudi Arabia. In our assessment, PIF's LTLC IDR is equalised with that of the sovereign. Consequently, we did not apply any discount to the sovereign's National Rating, which led to PIF's 'AAA(sau)' National Rating. DEBT RATINGS PIF's debt is rated in line with its IDRs. This comprises its wholly-owned GACI First Investment Company's guaranteed EMTN programme, senior unsecured long-term bonds under its EMTN programme and PIF's wholly owned SUCI Second Investment Company's trust certificate issuance programme and senior unsecured sukuk under the programme. ISSUER PROFILE PIF acts as the sole sovereign wealth fund of the Saudi government and its public policy mission is to invest domestically and internationally to achieve long-term returns to benefit national welfare. With the launch of the Vision Realisation Programme under the Saudi Vision 2030 in 2017, PIF became the leading strategic investment arm of the Saudi government, with consolidated assets to GDP at 92% at end-2023. PIF's investment abroad accounts for 20% of its portfolio, focusing in the US followed by Japan, India, Hong Kong, Spain, France and China. LIQUIDITY AND DEBT STRUCTURE PIF demonstrates robust access to international financial and capital markets. In 2024, it has continued to leverage debt capital markets by issuing USD5.5 billion and GBP650 million in bonds under its multicurrency EMTN programme, along with an additional USD3.5 billion sukuk, reinforcing its strategic capital-raising efforts. Additionally, PIF has secured a USD15 billion revolving credit facility, which remains undrawn. This facility, established for three years with a potential two-year extension, is supported by a syndicate of 23 international financial institutions. RATING SENSITIVITIES FACTORS THAT COULD, INDIVIDUALLY OR COLLECTIVELY, LEAD TO NEGATIVE RATING ACTION/DOWNGRADE Negative rating action on Saudi Arabia would lead to similar rating action on PIF. A weaker assessment of overall government support factors, leading to a score below 45 under our GRE Criteria. Negative rating action on PIF's Long- and Short-Term IDRs would also be reflected on GACI First Investment Company's guaranteed programme ratings and senior unsecured foreign-currency long-term ratings and SSIC's trust certificate issuance programme rating. FACTORS THAT COULD, INDIVIDUALLY OR COLLECTIVELY, LEAD TO POSITIVE RATING ACTION/UPGRADE Positive rating action on Saudi Arabia would lead to similar rating action on PIF, provided that our overall government support factors assessment are unchanged. Positive rating action on PIF's Long-Term IDRs would also be reflected on PIF's SPV GACI First Investment Company's guaranteed programme ratings and senior unsecured foreign-currency long-term ratings and SSIC's trust certificate issuance programme rating. ESG CONSIDERATIONS Fitch does not provide ESG relevance scores for GACI First Investment Company, PIF or SUCI Second Investment Company. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS PIF's IDRs are credit linked to the sovereign IDRs, while the ratings of the bonds issued by GACI and SSIC are credit linked to PIF. SOURCES OF INFORMATION The principal sources of information used in the analysis are described in the Applicable Criteria. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER RATING The principal sources of information used in the analysis are described in the Applicable Criteria. RATING ACTIONS Entity / Debt Rating Prior Public Investment Fund LT IDR A+ Affirmed A+ * ST IDR F1+ Affirmed F1+ * LC LT IDR A+ Affirmed A+ * LC ST IDR F1+ Affirmed F1+ * Natl LT AAA(sau) Affirmed AAA(sau) SUCI Second Investment Company * senior unsecured LT A+ Affirmed A+ GACI First Investment Company * senior unsecured LT A+ Affirmed A+ * senior unsecured ST F1+ Affirmed F1+ Previous Page of 110 rows20 rows50 rows100 rows500 rows Next Loading... VIEW ADDITIONAL RATING DETAILS Additional information is available on www.fitchratings.com PARTICIPATION STATUS The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure. APPLICABLE CRITERIA * National Scale Rating Criteria (pub. 22 Dec 2020) * Sukuk Rating Criteria (pub. 13 Jun 2022) * Public Policy Revenue-Supported Entities Rating Criteria (pub. 12 Jan 2024) (including rating assumption sensitivity) * Government-Related Entities Rating Criteria (pub. 09 Jul 2024) ADDITIONAL DISCLOSURES * Dodd-Frank Rating Information Disclosure Form * Solicitation Status * Endorsement Policy ENDORSEMENT STATUS GACI First Investment Company EU Issued, UK Endorsed Public Investment Fund EU Issued, UK Endorsed SUCI Second Investment Company EU Issued, UK Endorsed DISCLAIMER & DISCLOSURES All Fitch Ratings (Fitch) credit ratings are subject to certain limitations and disclaimers. Please read these limitations and disclaimers by following this link: https://www.fitchratings.com/understandingcreditratings. In addition, the following https://www.fitchratings.com/rating-definitions-document details Fitch's rating definitions for each rating s Read More SOLICITATION STATUS The ratings above were solicited and assigned or maintained by Fitch at the request of the rated entity/issuer or a related third party. Any exceptions follow below. ENDORSEMENT POLICY Fitch’s international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch’s approach to endorsement in the EU and the UK can be found on Fitch’s Regulatory Affairs page on Fitch’s website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis. International Public Finance Supranationals, Subnationals, and Agencies Middle East Asia-Pacific Latin America Cayman Islands Saudi Arabia RELATED REGIONS * Saudi Arabia * Cayman Islands ENTITIES * Public Investment Fund * GACI First Investment Company * SUCI Second Investment Company ISSUER CONTENT * فيتش تثبّت تصنيف صندوق الاستثمارات العامة عند مستوى "A+" مع نظرة مستقبلية مستقرة * Public Investment Fund * فيتش تثبّت تصنيف صندوق الاستثمارات العامة عند مستوى "A+" مع نظرة مستقبلية مستقرة * Fitch Affirms Public Investment Fund at 'A+'; Outlook Stable * فيتش تصنّف برنامج الصكوك الأولي لصندوق الاستثمارات العامة عند مستوى "A+" * Fitch Rates PIF's Inaugural Sukuk Programme 'A+' * فيتش ترفع درجة تصنيف قدرة المُصدر على الوفاء بالالتزامات لصندوق الاستثمارات العامة إلى "A+" مع نظرة مستقبلية مستقرة * Fitch Upgrades Public Investment Fund's IDRs to 'A+'; Outlook Stable * Sovereign Wealth Funds Peer Review 2022 RECOMMENDED CONTENT * Emerging Europe LRGs and Policy-Mission GREs’ Outlooks Stable amid Geopolitical Risks * Emerging Europe, Central Asia and Middle East Policy GREs and LRGs Outlook 2025 * Beijing Public Housing Center - ESG Navigator * No Rating Impact on Turkish Metropolitan Municipalities from Regulatory Change * Developed Europe LRGs, Policy Mission GREs Stable Amid Fragile Economic Growth * Developed Europe LRGs and Policy Mission GREs Outlook 2025 FITCH RATINGS ANALYSTS Maurycy Michalski, CFA Director Primary Rating Analyst +48 22 103 3027 maurycy.michalski@fitchratings.com Fitch Ratings Ireland Limited spolka z ograniczona odpowiedzialnoscia oddzial w Polsce Marszalkowska 107, 00-110 Warsaw Konstantin Anglichanov Senior Director Secondary Rating Analyst +49 69 768076 123 konstantin.anglichanov@fitchratings.com Vladimir Redkin Managing Director Committee Chairperson +44 20 3530 1514 vladimir.redkin@fitchratings.com MEDIA CONTACTS Athos Larkou London +44 20 3530 1549 athos.larkou@thefitchgroup.com RATINGS KEYOUTLOOKWATCHPositiveNegativeEvolvingStable * Ratings displayed in orange denotes EU or UK Unsolicited and Non-Participatory Ratings Where there was a review with no rating action (Review – No Action), please refer to the “Latest Rating Action Commentary” for an explanation of key rating drivers *Premium content is displayed in Fitch Red ABOUT * About UsContact UsCareersMedia RelationsFeedback REGULATORY * Regulatory AffairsCriteriaCode of Conduct & EthicsPrivacy PolicyWhistleblowing Policy and Reporting PRODUCT * Rating ActionsCoverageResearch & AnalyticsRating Products & ToolsRating PerformanceNewsletters REGION * EuropeNorth AmericaAfricaAsiaLatin AmericaMiddle East FITCH GROUP * Fitch GroupFitch RatingsFitch SolutionsFitch BohuaFitch LearningOwned by Hearst Copyright © 2024 Fitch Ratings, Inc., Fitch Solutions, Inc. and their subsidiaries. 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