Riyadh — Fitch Ratings revised the outlook on Public Investment Fund’s (PIF) long-term foreign- and local-currency issuer default ratings (IDR) on Saturday to “Positive” from “Stable.” The Positive outlooks reflect that of the sovereign.
The rating agency also affirmed the IDRs at ‘A’ Earlier this month. Fitch referred to improvements in the sovereign balance sheet due to higher oil revenues and commitment to fiscal consolidation.
In its early growth phase, PIF has low debt and is net cash positive, resulting in a very strong financial profile.
This declares the prospect of financial distress remote, which we also believe the state has a strong incentive to avoid; given its impact on international financial markets and the state’s borrowing capacity or other Saudi GREs.
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Fitch classifies PIF as a government-related entity under its Government-Related Entities Rating Criteria (GRE).
PIF, as a sovereign wealth fund, is the leading strategic investment arm of Saudi Arabia. It promotes the diversification and development of Saudi Arabia’s non-oil sector under the government’s “Vision 2030” strategic plan.
PIF’s strategic objectives and the national economic objectives are closely aligned. The fund’s total assets at the end-2020 were 47.1% of national GDP.
Moreover, 4 percent of Saudi Aramco’s shares were transferred to the Kingdom’s sovereign wealth fund last February.
Saudi Arabia’s Crown Prince Mohammed bin Salman said the transferred shares would help strengthen the strong credit rating; in the medium term for the sovereign wealth fund and solidify its financial position.