Saudi Real Estate Refinance Plans $2.3bn In Sukuk Sales

Saudi Arabia’s first mortgage-refinancing firm is set to debut in the bond market with a plan to raise as much as 8.5 billion riyals ($2.3 billion) this year as the kingdom seeks to expand home ownership.
The Saudi Real Estate Refinance Co, the state-run equivalent of Fannie Mae and Freddie Mac in the US, will tap domestic and international debt buyers with Islamic bonds, chief executive officer Fabrice Susini said in an interview in Riyadh on Wednesday. The refinance firm aims to fund around 80 percent of its assets with debt or loans, he added.
Saudi Arabia has taken a number of measures to increase home construction and lending as it seeks to overcome one of the world’s lowest mortgage penetration rates. For years, the absence of financing firms like SRC limited the ability of banks to expand their mortgage books amid central-bank limits on loans to any one sector.
The refinancing firm, which started in end of 2017, has been operating for one year. It was started with 5 billion riyals in capital and has been working closely with the government’s Real Estate Development Fund. The fund also provides interest-free loans to middle and low-income citizens through commercial banks.
The SRC plans to sell sukuk domestically in the next two quarters and will tap international investors by the end of the year, the CEO said.
Public offering
“We may look at a public offering rather than purely private placement,” Susini said. The plan then would be to issue around 1 billion riyals, which “would be a decent size for a first international issuance.”
Some of the funds raised will be funnelled to commercial lenders to be given as mortgages to citizens complying with state-set criteria to help provide affordable housing to citizens often ignored by banks, the CEO said.
The refinancing firm expects to buy 7 billion riyals to 10 billion riyals in mortgage portfolios held by banks and mortgage providers this year, Housing Minister Majed Al-Hogail told Bloomberg in an interview in Riyadh on Wednesday. Susini said most of those portfolio purchases will likely come from mortgage finance companies not banks.
“The mortgage finance companies, up until the creation of SRC, were very much dependent on the banks in terms of refinancing,” he said. “As we come with a new offer that is competitive, they will be more incentivised to work with us.”
For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.
Emicool Secures First-ever Green Financing To Boost Sustainable Growth
The liquidity generated will be strategically deployed to accelerate the company’s district cooling projects across t... Read more
UAEs Ruya Becomes First Global Islamic Bank To Offer Shariah-compliant Crypto Trading
Digital Islamic bank ruya teams up with Fuze to offer secure, ethical crypto investments aligned with Islamic financial... Read more
Startups In Abu Dhabis Hub71 Secured $2.17bn In Funding Last Year
Hub71 startups in Abu Dhabi saw massive increase in funding in 2024 as innovation economy thrives Read more
UAE Fintech Pay10 First To Launch On Central Banks Open Finance Framework
The company has acknowledged the Central Bank of the UAE's crucial role in facilitating a responsible and secure rollou... Read more
PayPal Expands In MEA Region With Its Newly Launched Hub In Dubai
Will serve 80 countries in Middle East and Africa from its Dubai Internet City hub; Has signed several deals with regio... Read more
New Board Certifies DMCC Tradeflow As Fully Shariah Compliant
Shariah Supervisory Board appointed to oversee Tradeflow’s Islamic finance offering; Certified fully-compliant with A... Read more