SRC Successfully Prices First $2 Billion International Sukuk To Boost Housing Finance In Saudi Arabia

The Saudi Real Estate Refinance Company (SRC), a subsidiary of the Public Investment Fund, has successfully priced its inaugural government-guaranteed international Sukuk at $2 billion. This issuance, divided into two tranches with three and ten-year maturities, was oversubscribed six times by over 300 institutional investors. This strong demand highlights SRC's significant role in the global housing finance market.

Majed Al-Hogail, Minister of Municipalities and Housing and Chairman of SRC, stated: "The successful listing of the international Sukuk Programme at the London Stock Exchange (LSE) reflects the unwavering support of our wise leadership and reinforces Saudi Arabia’s housing finance ecosystem, while providing innovative financing solutions for citizens. This marks a significant milestone in integrating the Saudi economy with global markets, attracting foreign direct investment, enhancing liquidity, and developing the secondary mortgage market in Saudi Arabia."

Al-Hogail further noted that Saudi Arabia plans to expand its mortgage finance sector by SAR500 billion by 2030, aiming for a total of SAR1.3 trillion. The Kingdom's mortgage market grew from SAR200 billion in 2018 to approximately SAR800 billion in 2024. Currently, these financings represent 23% of total bank assets. This growth is attributed to mega projects and Vision 2030's goals.

By the end of 2023, homeownership in Saudi Arabia reached 63.7%, surpassing the target of 63%. Vision 2030 aims for a homeownership rate of 70% among Saudi families by decade's end. SRC plays a crucial role in this vision by providing liquidity to lenders for affordable housing finance.

SRC CEO Majid Al-Abduljabbar highlighted that the Sukuk issuance demonstrates global confidence in Saudi Arabia's economy and diversifies funding sources. He stated: "The listing of the Sukuk Programme on the LSE not only strengthens SRC’s global presence and strategy to attract a diverse base of international investors, but also solidifies the company’s position as a key player in the mortgage finance market, paving the way for new strategic partnerships and high-quality international investments."

The successful listing underscores SRC's commitment to innovative financing solutions and accelerating growth in Saudi Arabia's housing sector. This aligns with objectives set by both the Housing Program and Financial Sector Development Program.

Credit Ratings and Market Standards

SRC holds strong credit ratings from major agencies: Fitch ('A+’ – Stable), S&P ('A’ – Positive), and Moody’s (A2 – Positive). These ratings affirm SRC’s robust position as it launches its first international Sukuk Programme. The programme adheres to global Sukuk market standards and Islamic finance best practices.

Established by PIF in 2017, SRC operates under a license from SAMA to facilitate real estate refinancing. It supports Vision 2030’s goal to increase homeownership rates among Saudis by providing liquidity to lenders for affordable housing finance.

The Sukuk will be listed on LSE’s International Securities Market (ISM), enhancing market liquidity while supporting Saudi Arabia’s mortgage finance ecosystem.

With inputs from SPA