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Jeddah - Yasmine El Tohamy - RIYADH: Global credit agency Fitch Ratings has kept Saudi Arabia’s Public Investment Fund’s long-term foreign- and local-currency issuer default ratings at “A+” with a stable outlook.  

This reaffirmation comes as the fund continues to play a key role in driving the Kingdom’s economic diversification efforts. 

As per Fitch, an “A+” rating is a marker of very high quality, signifying the PIF’s robust ability to repay its debts.
The US-based entity noted that the PIF maintains strong financial autonomy in carrying out its investment.  

The fund is playing a significant role in boosting Saudi Arabia’s non-oil gross domestic product by engaging in investments across diversified sectors in both local and international markets.  

Fitch added that PIF’s ownership and control remains very strong, as the fund is exempted from a bankruptcy regime, and a Royal Decree could revert the assets and liabilities of the fund to the state.  

As the key economic catalyst of Saudi Arabia, Fitch said it does not expect any changes to PIF’s status, ownership and control over the medium term.  

Emphasizing the Kingdom’s support to the PIF, the report highlighted that the transfer of 8 percent of the Saudi government’s shares in Aramco to the fund is expected to strengthen its dividend base, thereby increasing government support. 

Additionally, the credit rating agency expects the Saudi Arabian government to forgo the PIF’s dividend distribution for 2023. This decision aligns with the government’s objective to deploy more funds into the PIF and its subsidiaries, executing its policy mandate under Vision 2030. 

As part of that ambitious goal, the Kingdom seeks to diversify its economy away from oil, and the PIF stands out as a dynamic economic powerhouse driving this transformation. 

According to Fitch, the PIF has no direct substitutes in the Kingdom, serving as the sole sovereign wealth fund of Saudi Arabia.  

The report added that the fund has created positive socio-political implications in Saudi Arabia by creating 1.8 million jobs across 13 strategic sectors such as telecommunications, information technology and financial services. Other sectors encompassed food and agriculture, as well as transport and logistics.
“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,” noted Fitch.  

The agency anticipates PIF’s gradual evolution as a reference issuer for Saudi Arabia, as the fund continues to tap international capital markets. This is particularly being done through trust certificate issuance programs, all while receiving capital funding from the government during its growth phase. 

PIF’s trust issuance program, issued through the trustee SUCI Second Investment Co. has also been affirmed at “A+” by Fitch. 

In August, PIF unveiled its annual report for 2022, disclosing that it currently holds assets worth SR2.23 trillion ($595 billion). The fund has already established 70 companies, and 25 of them, including Saudi Coffee Co. and Halal Products Development Co., were founded in 2022.