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Saudi Aramco’s transfer of four percent of its ownership of the company to the kingdom’s Public Investment Fund (PIF) is credit positive, according to ratings agency Moody’s.
The share transfer is credit positive for the PIF because it increases its assets under management, improves its sector diversification and adds an asset that regularly pays dividends to its portfolio, the agency said in a report on Tuesday.
The transfer reflects the fund’s importance to Saudi Arabia and its key role in implementing the country’s Vision 2030.
“The transaction required no payments to Saudi Arabia from PIF and is therefore akin to an equity injection,” Moody’s said.
PIF’s assets under management will increase by SAR296.4 billion ($79 billion) or 20 percent versus year-end 2020 following the transfer, based on Saudi Aramco’s market capitalisation as of 13 February, the global ratings agency noted.
“Saudi Aramco is a regular dividend payer and has had a strong commitment to pay at least $75 billion in annual dividends, which will result in additional dividend income of SAR11.25 billion ($3 billion) per year,” Moody’s said.
“The transfer reflects Saudi Arabia's commitment to PIF. Since a change in oversight in 2015 to the Council of Economic and Development Affairs from the Ministry of Finance, the fund has received regular asset transfers from Saudi Arabia, and we expect additional contributions in the future,” the ratings agency noted.
(Writing by Imogen Lillywhite; editing by Seban Scaria )
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