Saudi wealth fund mandates banks for debut dollar green bond

SAUDI Arabia’s sovereign wealth fund has mandated banks for a dollar green bond sale, according to people with knowledge of the matter, as the kingdom seeks to reshape its reputation on environmental issues. 

The PIF, as the fund is known, is working with lenders BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs Group and JPMorgan on the debut multi-tranche ethical sale, the same people said. Investor calls for the offering to start on Tuesday (Sep 27). 

The sale plans come as Saudi Arabia – one of the world’s largest oil exporters – seeks to increase the role that environmental, social and governance principles play in its investments. The fund is also working with BlackRock on developing an ESG framework.

The fund has been investing more into businesses that benefit from a transition away from fossil fuels, mirroring the kingdom’s wider strategy to diversify its economy away from a reliance on crude sales. It has boosted its stake in ACWA Power International, a Saudi producer that is spending heavily on renewable energy from solar to hydrogen, and also invested in electric vehicle manufacturer Lucid.

While the fund has “indirect” exposure to environmental and social risks, its “portfolio is quite diversified and many of the sectors where PIF invests have low exposure to environmental and social risks,” Moody’s said in February.

PIF is rated A1 by Moody’s Investors Service and A by Fitch, the sixth-highest investment-grade level – also the same grade it assigns for Saudi Arabia’s government. BLOOMBERG