Neom, the ambitious mega-project in Saudi Arabia, has recently secured a significant US$3bn untied facility from Italy’s export credit agency Sace and a syndicate of nine international banks. This funding will be instrumental in supporting Neom’s development, which aims 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.
The Neom development company, fully owned by Saudi Arabia’s sovereign Public Investment Fund, plans to utilize the proceeds from this loan for projects in key sectors such as infrastructure, construction, and transport. Sace’s support on an untied basis guarantees the multi-currency facility from the international banks involved, including Agricultural Bank of China, BBVA, Bank of America, Bank of China, Citi, China Construction Bank, Crédit Agricole CIB, HSBC, and JP Morgan.
It is important to note that Sace’s cover is not directly linked to export contracts and falls outside the scope of the OECD Arrangement on Officially Supported Export Credits. However, Sace highlights that the partnership will enable Neom to leverage supplies from Italian businesses, particularly SMEs. Italian suppliers and contractors have already supported Neom on various projects, with contracts worth US$6.3bn, and this deal aims to further strengthen and develop these important international business relationships.
Neom, launched by Saudi Arabia’s Crown Prince Mohammed bin Salman in 2017, is a US$500bn giga-project that aligns with Saudi Vision 2030, a comprehensive initiative aimed at diversifying the state’s economy away from oil. Neom views this recent deal as its first corporate ECA financing and the largest untied financing ever guaranteed by Sace. Rayan Fayez, Neom’s deputy CEO, emphasizes that securing this Sace untied facility not only diversifies their funding sources but also provides financial agility to execute strategic initiatives.
Sace has a track record of extending untied support worth billions of dollars, often to secure energy and metals supplies from major commodity traders. Alessandra Ricci, Sace’s CEO, expresses enthusiasm for collaborating with Neom on this cutting-edge project, which generates opportunities for Italian SMEs and supply chains across various sectors. Opening new routes to ‘Made in Italy’ remains a priority for Sace to facilitate long-term growth for Italian exports.
The partnership between Neom and Sace represents a significant milestone in the development of the Neom project and underscores the commitment to leveraging international financing and expertise to realize its ambitious goals. The untied facility will not only enhance Neom’s financial stability but also position it well to tap into the international ECA, loan, and capital markets for future projects. This collaboration sets the stage for potential future deals with international lenders, further advancing Neom’s vision of becoming a leading sustainable and technologically advanced hub in the region.
In conclusion, the partnership between Neom and Sace marks a significant step forward in the realization of the ambitious Neom project, demonstrating the commitment to sustainable development and economic diversification in Saudi Arabia. By leveraging international financing and expertise, Neom is poised to achieve its vision of creating a cutting-edge, sustainable, and technologically advanced cluster of cities powered by renewable energy.
