|13 March, 2019

The Saudi Real Estate Refinance Company issues Sukuk

Successful issuances in multiple tenors, including an issuance utilizing the SAR Mid-Rate Swap benchmark for the first time in the Saudi Debt Capital Market

Riyadh, KSA:Saudi Real Estate Refinance Company (SRC), announced that under its SAR 11 billion Saudi-Riyal Sukuk programme, it has successfully completed Sukuk issuances in multiple tenors and under four series. This includes a series which was priced off the SAR Mid-Rate Swap curve, positioning SRC as the first Saudi issuer to reference the SAR Mid-Rate Swap benchmark for a fixed rate Sukuk issuance.

Furthermore, SRC becomes the first non-sovereign issuer in Saudi Arabia to issue a Saudi-riyal denominated fixed rate instrument across several tenors (5,7 and 10 years), establishing itself as a key sponsor, alongside the government, in developing the fixed rate issuance curve in Saudi Arabia. The Sukuk was a private offering to sophisticated investors that attracted a healthy orderbook despite the highly competitive pricing and emerging track-record of the company.

SRC, wholly owned by the Public Investment Fund of Saudi Arabia (PIF), was established with the objectives of supporting the national agenda of increasing home ownership amongst Saudi citizens and promoting the development of the housing finance market in the Kingdom. SRC focuses on the refinancing and liquidity components (and standardisation and development of best practices in respect thereof) of the Saudi housing market. SRC plays an important role in delivering the Vision 2030 housing sector goal of increasing the number of citizens owning their own homes to 60% by 2020.

On the back of its key role in the Kingdom’s housing sector and clear growth vision demonstrated by its recent acquisitions of mortgage portfolios from finance companies in Saudi, the issuances were well received by key Saudi debt capital market investors. The oversubscribed order book enabled SRC to exceed its objectives in securing a low cost of funding. This is seen as a first step towards developing an additional funding avenue for SRC even though it still has the ability to tap into undrawn committed capital from its shareholder. Going forward, SRC is expected to be an active issuer of debt, in multiple formats, in the local and international debt capital markets.

"We value investors’ trust in SRC and we see this encouraging demand as a message to continue our growth journey and work even harder to meet and exceed our stakeholders' objectives. This is an important milestone in the establishment of SRC’s capital markets profile and a very proud moment for the company" Fabrice Susini, CEO of SRC said.

Majed Najm, CEO & Board Member of HSBC Saudi Arabia, added, “We were privileged to work with SRC on this landmark transaction and we are thankful to SRC and its shareholder, the Public Investment Fund, for allowing us the opportunity to contribute to the success of this transaction.”

The Saudi market has proven itself to be very resilient despite the challenging market conditions in the region. Investors' appetite remains strong for high-quality or government related entities with linkages to Saudi Vision.

Faisal Qadri, Managing Director, Head of Debt Capital Markets & Structured Finance, HSBC Saudi Arabia stated: “This is a great achievement for SRC, and stands as a testament to the confidence local investors have in this fast-growing name which is expected to play a critical role in the development of the Saudi housing sector. Not only did it raise SAR 750 million, but it has also done so at terms that met their key funding objectives across the various issuances.”

This is the first non-government debt capital market transaction in Saudi Arabia in 2019, opening the debt capital market for other potential Saudi issuers.

HSBC Saudi Arabia acted as the Sole Arranger on the establishment of the Sukuk programme and as a Manager, Sukukholders’ Agent and Payment Administrator on the issuances under the programme.

-Ends-

About Saudi Real Estate Refinance Company (SRC):

Fully owned by the Public investment fund (PIF), the Saudi Real Estate Refinance Company (SRC) was established in 2017 with the goal to help transform the local housing market.

Having introduced long-term fixed-rate mortgages in Saudi Arabia for the first time, SRC seeks to enable lenders to offer more accessible, predictable home buying solutions that better address aspiring Saudi homebuyers’ needs. As one of its primary roles, SRC offers lenders funding to provide liquidity or capital relief, enabling growth in the home finance sector to increase home ownership rates among Saudi citizens. SRC then aggregates and packages portfolios of financing into mortgage backed securities to sell to domestic and international investors.

SRC is licensed to operate in the secondary real estate market by the Saudi Arabian Monetary Authority (SAMA). With a world class management team drawing from international best practice, SRC is uniquely positioned to become the partner of choice for lenders in the Kingdom.

For more information please visit: http://srco.com.sa

For press enquiries, please contact:

Ajith Henry

Hill+Knowlton Strategies

T: +966 11 2385526

ajith.henry@hkstrategies.com

© Press Release 2019

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