The Saudi Real Estate Refinance Company (SRC) has successfully priced its first government-guaranteed international Sukuk issuance, valued at $2 billion. The offering, structured in two tranches with maturities of three and ten years, was oversubscribed six times, attracting strong demand from over 300 institutional investors. The Sukuk is part of SRC’s $5 billion international Sukuk program, listed on the London Stock Exchange (LSE).
Context and Background
The Saudi Real Estate Refinance Company (SRC), established by the Public Investment Fund (PIF) in 2017, was created to develop Saudi Arabia’s real estate finance market. Operating under a license from the Saudi Central Bank (SAMA), SRC plays a pivotal role in supporting the Kingdom’s Housing Program under Vision 2030, which aims to increase homeownership rates among Saudi citizens. The company provides liquidity to lenders, enabling them to offer affordable housing finance solutions.
Key Details
The $2 billion Sukuk issuance is backed by strong credit ratings from leading agencies, including Fitch (‘A+’ – Stable), S&P (‘A’ – Positive), and Moody’s (A2 – Positive). The Sukuk will be listed on the International Securities Market (ISM) of the London Stock Exchange (LSE), enhancing market liquidity and supporting Saudi Arabia’s mortgage finance ecosystem. Minister of Municipalities and Housing and Chairman of the SRC Board, Majed Al-Hogail, highlighted the significance of this milestone, stating that it reflects the Kingdom’s commitment to integrating its economy with global markets and attracting foreign direct investment.
Implications and Impact
The oversubscription of the Sukuk issuance underscores global investor confidence in Saudi Arabia’s economy and its Vision 2030 initiatives. This development strengthens the Kingdom’s position in the global housing finance market and paves the way for strategic international partnerships. SRC’s CEO, Majid Al-Abduljabbar, emphasized that the listing on the LSE not only diversifies funding sources but also accelerates the growth of Saudi Arabia’s housing sector, contributing to the objectives of the Housing Program and the Financial Sector Development Program.
Vision 2030 Alignment
The successful pricing and listing of SRC’s international Sukuk align closely with Saudi Arabia’s Vision 2030 goals, particularly in expanding the mortgage finance sector and increasing homeownership rates. The Kingdom aims to grow its mortgage market to SAR1.3 trillion by 2030, up from SAR800 billion in 2024. This initiative supports the broader objective of achieving a 70% homeownership rate among Saudi families, which stood at 63.7% by the end of 2023. SRC’s efforts are instrumental in driving these targets, reinforcing Saudi Arabia’s commitment to economic diversification and sustainable development.
20 Questions
Q1. What is the value of SRC’s international Sukuk issuance?
A1. The Sukuk issuance is valued at $2 billion.
Q2. How many tranches is the Sukuk issuance structured into?
A2. The issuance is structured into two tranches with maturities of three and ten years.
Q3. How many times was the Sukuk oversubscribed?
A3. The Sukuk was oversubscribed six times.
Q4. How many institutional investors participated in the Sukuk issuance?
A4. Over 300 institutional investors participated in the issuance.
Q5. Where was the Sukuk listed?
A5. The Sukuk was listed on the London Stock Exchange (LSE).
Q6. What is the total value of SRC’s international Sukuk program?
A6. The program is valued at $5 billion.
Q7. Who is the Chairman of the SRC Board?
A7. Majed Al-Hogail, the Minister of Municipalities and Housing, is the Chairman of the SRC Board.
Q8. What role does SRC play in Saudi Arabia’s housing market?
A8. SRC provides liquidity to lenders, enabling them to offer affordable housing finance solutions.
Q9. What is the target homeownership rate under Vision 2030?
A9. The target homeownership rate is 70% by 2030.
Q10. What was the homeownership rate in Saudi Arabia at the end of 2023?
A10. The homeownership rate was 63.7% at the end of 2023.
Q11. What are the credit ratings of SRC?
A11. SRC holds ratings of ‘A+’ (Fitch), ‘A’ (S&P), and A2 (Moody’s).
Q12. What is the goal for Saudi Arabia’s mortgage market by 2030?
A12. The goal is to grow the mortgage market to SAR1.3 trillion by 2030.
Q13. What was the size of Saudi Arabia’s mortgage market in 2024?
A13. The mortgage market was approximately SAR800 billion in 2024.
Q14. Who established SRC?
A14. SRC was established by the Public Investment Fund (PIF) in 2017.
Q15. What license does SRC operate under?
A15. SRC operates under a license from the Saudi Central Bank (SAMA).
Q16. What is the purpose of SRC’s Sukuk issuance?
A16. The issuance aims to enhance market liquidity and support Saudi Arabia’s mortgage finance ecosystem.
Q17. How does the Sukuk issuance contribute to Vision 2030?
A17. It supports economic diversification, increases homeownership, and attracts foreign direct investment.
Q18. What did Majid Al-Abduljabbar emphasize about the Sukuk listing?
A18. He emphasized that it diversifies funding sources and accelerates the growth of Saudi Arabia’s housing sector.
Q19. What is the significance of listing the Sukuk on the LSE?
A19. It enhances global market liquidity and strengthens Saudi Arabia’s position in the housing finance market.
Q20. What is the expected growth of Saudi Arabia’s mortgage finance sector by 2030?
A20. The sector is expected to grow by SAR500 billion to reach SAR1.3 trillion by 2030.
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