Saudi Arabia’s Neom development has secured a US$3bn untied facility from Italy’s export credit agency Sace and a syndicate of nine international banks.
The Neom mega-project promises to transform a desert region in the northwest of Saudi Arabia into a special economic zone and futuristic cluster of cities powered entirely by renewable energy.
Neom’s development company – fully owned by Saudi Arabia’s sovereign Public Investment Fund – will use the proceeds of this loan for projects in key sectors such as infrastructure, construction and transport.
Sace is offering support on an untied basis, guaranteeing the multi-currency facility from the international banks: Agricultural Bank of China, BBVA, Bank of America, Bank of China, Citi, China Construction Bank, Crédit Agricole CIB, HSBC and JP Morgan.
Sace’s cover is not directly linked to export contracts and falls outside the scope of the OECD Arrangement on Officially Supported Export Credits.
Nevertheless, in a statement this week, Sace says “the partnership will enable Neom to leverage supplies from Italian businesses, particularly SMEs”.
“To date, Italian suppliers and contractors have supported Neom on a range of projects, with contracts worth US$6.3bn, and the deal aims to further strengthen and develop these important international business relationships,” it adds.
Saud Arabia’s Crown Prince Mohammed bin Salman launched Neom in 2017 and said the US$500bn giga-project would support Saudi Vision 2030, a mammoth initiative that aims to diversify the state’s economy away from oil.
In a statement, Neom says the deal is its first corporate ECA financing and the largest untied financing ever guaranteed by Sace.
“Securing this Sace untied facility not only diversifies our funding sources, but also provides us with the financial agility to execute our strategic initiatives, says Rayan Fayez, Neom’s deputy CEO. “This deal enhances our financial stability and positions us well to further tap into the international ECA, loan and capital markets. We anticipate this will be the first of many deals with international lenders.”
Sace has extended untied support worth billions of dollars in recent years, often to secure energy and metals supplies from major commodity traders such as Vitol, Gunvor, Trafigura and Mercuria.
“We are glad to play our part alongside Neom in this cutting-edge project, which generates opportunities in a wide range of sectors for Italian SMEs and supply chains,” says Alessandra Ricci, Sace’s CEO.
“Opening new routes to ‘Made in Italy’ is a priority to allow a long-term growth for Italian exports, matching their potential.”
