Saudi Arabia’s oh so green bond offering

Saudi Arabia’s oh so green bond offering

It should come as no surprise that noted ESG titan Crown Prince Mohammed bin Salman’s Public Investment Fund plans to issue green bonds. Why wouldn’t it? Shell boasts of its nature-based solutions and Drax is into forestry. This is simply how the world works today.

Cynicism aside, Saudi Arabia’s bond prospectus is worth a read: the $608bn PIF has never before allowed investors such a detailed look at its books. Anyone interested in the headline numbers can read about them here. Alphaville took a closer look at the debt offering itself.

All bond prospectuses include a section on “risk factors” — a list of things that could go wrong and impact the ability of the issuer and guarantor to fulfil their various financial obligations to buyers. The document prepared by Saudi Arabia’s PIFis no exception.

Plenty of the potential hazards in this prospectus are relatively typical. The Fund’s past performance isn’t indicative of its future results; public companies it’s invested in might do stupid things that damage PIF’s performance; its own credit rating may change etc etc.

Other risks are more Saudi Arabia-specific. First, there is a chance — however slim — that the Fund’s investments in “giga-projects” like Neom, a 26,500km² line-shaped, desert