Saudi Real Estate Refinance Co issues $200m sukuk

SRC, a wholly owned subsidiary of the kingdom’s sovereign wealth fund PIF, aims to accelerate housing construction



Government-owned Saudi Real Estate Refinance Co (SRC) said on Wednesday it had completed a SAR750m ($200m) sukuk issue with multiple tenors, the first transaction by a non-sovereign issuer in Saudi Arabia in 2019.

The issuance comes under a programme SRC established in December that allows it to issue up to SAR11bn of local currency-denominated Islamic bonds.

SRC, a wholly owned subsidiary of the kingdom’s sovereign wealth fund (PIF), aims to accelerate housing construction – a sensitive social issue and a top objective of economic reforms – by injecting liquidity into the real estate market.

Its target is to eventually refinance 20 per cent of Saudi Arabia’s primary home loans market, which authorities hope to expand to SAR500bn by 2020 and SAR800bn by 2028. Real estate financing hit SAR4.7bn in January.

The company mandated HSBC Saudi Arabia as sole lead manager and bookrunner of the sukuk programme.

The programme may help the company become a major issuer in Saudi Arabia’s domestic bond market. Increasing activity in that market is another goal of economic reforms.

Saudi Arabia’s housing minister said last week he expected investments in the real estate financing sector to reach between SAR60bn and SAR80bn in 2019.

Read: Saudi sees up to $21bn investment in 2019 housing sector