Saudi Arabia's Public Investment Fund (PIF) said on Tuesday it has agreed to raise a term loan of up to $5 billion from a syndicate of nine international lenders that will be covered by Korea Trade Insurance Corporation (K-SURE).

Fahad AlSaif, Head of the Global Capital Finance Division at PIF, said the new financing "strengthens economic ties between Saudi Arabian and South Korean businesses".

The K-SURE financing, which marks PIF's first covered by an export credit agency, has a 13 year maturity and will initially be for $3 billion, with an option to increase it to $5 billion.

PIF is at the centre of Saudi Arabia's ambitious plan to wean itself off oil as it spends billions on diversifying its economy. The fund has been expanding both at home and internationally with a slew of investments and joint ventures.

PIF cites loan and debt instruments as one of its main sources of funding along with capital injections from the government, government assets transferred to the PIF, and returned earnings from investments.

The more than $700 billion fund holds a total stake of 8% in state-owned oil giant Aramco, giving it a rich dividend stream.

The K-SURE loan comes in the wake of PIF announcing a joint venture with South Korean automaker Hyundai in October to build a car plant in Saudi Arabia in a project estimated to exceed $500 million. PIF will have a 70% stake in the venture, with Hyundai holding the 30%.

(Reporting by Shivani Tanna in Bengaluru; Editing by Jacqueline Wong and Alexander Smith)