Saudi Ministry of Finance guarantees SRC's Sukuk issuances

Credit support agreement signed between Kingdom's Minister of Finance and Minister of Housing at the Financial Sector Conference


Riyadh, KSA: Saudi Real Estate Refinance Company (SRC) announced that the Ministry of Finance of Saudi Arabia will provide guarantee for SRC’s future Sukuk issuances. 

The credit support agreement was signed between His Excellency Mohammed Al-Jadaan, Minister of Finance and His Excellency Majid Al-Hogail, the Kingdom’s Housing Minister as the Chairman of Saudi Real Estate Refinance Company (SRC). The credit support agreement that will provide a first demand unconditional guarantee for SRC’s future Sukuk issuances was signed at the recently held Financial Sector Conference in Riyadh.

The Ministry of Finance guarantee will reduce the cost of funds for SRC, enabling it to attract foreign and local investors across capital markets. This move will further enable SRC to fulfill its mission of increasing home ownership in the Kingdom to 60 per cent by 2020, and 70 per cent by 2030, as part of the housing goals attached to the Vision 2030 agenda.

The agreement also acts as a catalyst for SRC to provide liquidity to banks and mortgage finance companies in the Kingdom, with a target of refinancing at least 10 per cent of the mortgage market by 2020, and 20 per cent by 2028.

Commenting on the announcement, Fabrice Susini, CEO of SRC, said: “This is a significant milestone for the Kingdom’s mortgage financing market in general which is still in the nascent stages when compared to developed economies. The guarantee provided by the Ministry of Finance for our future Sukuk issuances will help SRC accelerate its purpose of developing a robust secondary mortgage market in the Kingdom by providing liquidity and capital relief to lenders. This in turn will help the financial institutions to offer attractive mortgage solutions to aspiring home owners in Saudi Arabia.”

The announcement follows SRC’s sukuk issuance of SAR750 million, making it the first non-sovereign issuer in Saudi Arabia in 2019. The two-tranche issuance was concluded under SRC’s SAR11 billion Sukuk program established in December 2018. This is primarily aimed at bolstering SRC’s acquisition of mortgage portfolios held by banks and specialist mortgage providers, resulting in further origination of mortgages in the markets.

As part of the Sukuk program, SRC expects to tap the market with multiple issuances in 2019. 


About Saudi Real Estate Refinance Company (SRC):

Fully owned by the Saudi 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.

SRC enables originators to increase the number, type and length of long-term fixed-rate (LTFR) mortgages that in turn provide consumers with a high degree of predictability and protection from potential interest rate increases. As one of its primary roles, SRC offers lenders funding to provide liquidity and 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.

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For press enquiries about SRC, please contact:
Ajith Henry
Hill+Knowlton Strategies
T: +971 55 6612391 

© Press Release 2019

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