PIF completes $7bn inaugural murabaha credit facility

Public Investment Fund, Saudi Arabia's sovereign wealth fund has completed its first murabaha credit facility valued at $7 billion, as it continues to diversify its funding sources.

The facility is part of its 'medium-term capital raising strategy', PIF said in a statement on Monday. The structure is supported by a syndicate of 20 international and regional financial institutions. 

The Murabaha is one of the most popular modes of Islamic financing, in which all parties agree to the cost and markup (profit margin) of an asset. It is also referred to as cost-plus financing.

Fahad AlSaif, PIF’s head of the global capital finance division and head of investment strategy and economic insights division, said that the credit facility demonstrates the PIF’s financing strategy and use of diversified funding sources.

PIF has four main sources of funding: capital injections from government, government asset transfers, retained earnings from investments, and loans and debt instruments.

PIF is rated Aa3 by Moody’s with a stable outlook and A+ by Fitch, also with stable outlook.