By Davide Barbuscia

Saudi Arabia's Public Investment Fund (PIF) has suspended plans to change some of the terms of a $10 billion (£7.97 billion) loan it raised last year after some banks voiced reservations, sources said.

Over the last two years, banks have lent billions to the fund, which is the engine of Crown Prince Mohammed bin Salman's economic transformation plans for Saudi Arabia and aims to increase its assets under management to $400 billion by the end of this year.

This was partly on the expectation that establishing banking relationships would lead to lucrative mandates on capital markets deals.

Banks continue to court the PIF, but a proposal made earlier this year to delay the repayment of a $10 billion bridge loan raised in October was questioned by some of the lenders, two sources familiar with the matter said on condition of anonymity.

The financing, needed to back new investments, was provided by 10 international banks including Bank of America, HSBC and JP Morgan. It was linked to the acquisition by Saudi Aramco of PIF's stake in petrochemical company Saudi Basic Corporation (SABIC), a deal worth nearly $70 billion.

Earlier this year, the fund held informal discussions with banks to change some terms of the facility, four sources familiar with the matter said. Two of them said the plans were subsequently put aside after some of the banks raised doubts about the proposed changes.

The bridge loan agreement included a mandatory pre-payment after receipt of the Aramco funds for SABIC, but PIF asked banks to instead keep the outstanding loan amount until maturity, the sources said.

PIF, which did not immediately respond to a request for comment, received support for the idea from most of the banks on the deal, but was also told the amendment would not be seen positively, one of the sources said, without specifying which of the banks agreed to the proposal.

"Bridges are meant to be short term, so if you extend them you're essentially taking advantage of cheap liquidity but (it) doesn't send a good signal," said the source, speaking anonymously as the discussions were private.

Aramco is set to pay $25 billion this year to the sovereign wealth fund, according to the SABIC acquisition payment terms.

However, sources told Reuters last month the national oil giant was looking to restructure the SABIC deal after a drop in SABIC's value.

PIF has this year spent billions of dollars to buy shares of companies overseas, with its firepower boosted by a $40 billion transfer of Saudi foreign reserves in March and April.

(Reporting by Davide Barbuscia; editing by Barbara Lewis)