Saudi Real Estate Refinance Co. concludes $933m sukuk issuance

A fresh influx of liquidity is set to hit the Kingdom’s housing market with the Saudi Real Estate Refinance Co. completing an SR3.5 billion ($933 million) sukuk issuance.

SRC, a subsidiary of the Public Investment Fund, stated that the offering forms the last two tranches of its SR20 billion government-guaranteed sukuk program, featuring dual tenors of five and seven years, according to a press note.

“The issuance witnessed interest from the institutional investor community, reinforcing the confidence in the local market and in SRC’s operational framework; it also affirms SRC’s pivotal role in contributing to Vision 2030 Housing Program as well as to the Financial Sector Development Program,” Fabrice Susini, CEO of SRC, said.

He further noted: “SRC’s consistent sukuk issuances reinforce our commitment to taking part in financial sector development in Saudi Arabia. Through these issuances, SRC is contributing to diversifying funding for the real estate sector and to driving growth.

“By providing banks and real estate finance companies with liquidity, SRC enables further development in the home financing sector, increasing homeownership rates among Saudi citizens.”

SRC indicated that HSBC served as the lead coordinator for this latest offering. The joint lead managers included Aljazira Capital, HSBC Saudi Arabia, Al-Rajhi Capital, and SNB Capital.

Earlier this year, SRC received strong credit ratings, securing an “A+” from Fitch Ratings, an “A-” from S&P Global, and an “A2” from Moody’s Investors Service, reflecting its financial stability and reliability.

Furthermore, SRC managed to issue SR3.5 billion in sukuk in May 2023, further solidifying its position as a catalyst for the country’s housing sector.

Moreover, Saudi banks’ new residential mortgage lending recorded a 31.7 percent growth in August compared to July, according to the Saudi Central Bank.

The apex bank, also known as SAMA, recently revealed that mortgage lending to houses, apartments and lands rose to SR7.14 billion in August from SR5.43 billion in July.

The growth observed in apartment lending is particularly intriguing, as the banks injected SR1.78 billion into them in August, reflecting a robust 45 percent surge over July.

Established in 2017 by PIF after obtaining a license from SAMA, SRC plays a pivotal role in supporting the government’s Vision 2030 Housing Program.

Its mission is to catalyze the growth and sustainability of the housing finance sector in the Kingdom and establish a thriving secondary real estate market.