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Saudi Real Estate Refinance Company (SRC) successfully closes its SAR 10 billion Domestic Sukuk Program

SAR 4 billion Sukuk is last in series of oversubscribed issuances over twelve months

Fabrice Susini, CEO, The Saudi Real Estate Refinance Company (SRC)

The Saudi Real Estate Refinance Company (SRC) announced it had successfully closed its 10 billion Saudi-Riyal denominated Sukuk program following the completion of the last series of SAR 4 billion issuance which was 1.8 times oversubscribed, despite volatile market conditions.

The domestic Sukuk program, launched in March 2021 with the successful completion of the first series of SAR 4 billion (approx. USD 1.067 billion). The issuance offered in 7 and 10-year dual tenors to Saudi-based institutional investors was 2.15 times oversubscribed, attracting an orderbook in excess of SAR 8 billion.

The second tranche of SAR 2 billion (approx. USD 533 million) Sukuk was offered in December 2021 to Saudi institutional investors at a competitive fixed profit rate of 3.04%. The issuance received a significant positive reaction from the market and was 2.5 times oversubscribed.

Fabrice Susini, CEO of SRC, wholly owned by the Public Investment Fund (PIF), said: “The market’s positive response to our SAR 10 billion domestic Sukuk program, as demonstrated in the series of oversubscribed issuances within 12 months from the offering of the first series, is a testament to the valuable trust investors have placed in SRC and their strong confidence in the Kingdom’s housing market and economy.

Our main objective is to provide access to cheaper home financing loans for Saudi citizens while widening the borrowers base and, importantly, to maintain the stability and long-term resilience of the Saudi mortgage market through changing economic cycles.

The funding SRC raised thus far enables us to advance these objectives and to expand our refinancing offering for home finance lenders while helping them to de-risk and protect their balance sheet and financial positions. It underpins our drive to establish a robust and active secondary home financing market in the Kingdom which ultimately supports the efficiency and stability of the primary housing market.

As the most active issuer of Sukuks in the domestic market, we will continue to work closely with our partners including the banks, originators, and lenders as well as investors to regularly offer Sukuk program to assist with further stabilizing the Saudi mortgage market and accelerate home ownership in the Kingdom in line with Vision 2030 goals.”

The successful completion of the domestic Sukuk program complements the objectives of the Financial Sector Development Program to deepen Saudi capital markets.

The lead coordinator on the series offering was HSBC Saudi Arabia and the joint lead managers were AlJazira Capital, HSBC Saudi Arabia, Riyad Capital, and SNB Capital.