Saudi Real Estate Refinance Co. Raises $2 Billion in First International Sukuk Issuance

The Saudi Real Estate Refinance Co. (SRC), a subsidiary of the Public Investment Fund (PIF), has successfully raised $2 billion through its inaugural international sukuk issuance, marking a significant step toward boosting the Kingdom’s economy and attracting global investment.

The sukuk, guaranteed by the Saudi government, was oversubscribed six times, with demand from over 300 institutional investors worldwide, reflecting strong investor confidence in Saudi Arabia’s economy. This issuance aligns with the Kingdom’s Vision 2030 goals, which include expanding the mortgage market, promoting homeownership, and fostering foreign direct investment.

“This marks a significant milestone in integrating the Saudi economy with global markets, enhancing liquidity, and developing the secondary mortgage market,” said Majid Al-Hogail, Minister of Municipalities and Housing and Chairman of SRC.

Structured in two tranches with three- and ten-year maturities, the sukuk is part of SRC’s $5 billion international sukuk program and will be listed on the International Securities Market of the London Stock Exchange. The listing is expected to strengthen Saudi Arabia’s connection to global capital markets and boost liquidity in the Kingdom’s mortgage finance sector.

Al-Hogail highlighted Saudi Arabia’s plans to expand its mortgage finance sector to SR1.3 trillion ($346.6 billion) by 2030, up from SR800 billion in 2024 and SR200 billion in 2018. Mortgage financing now represents 23 percent of total bank assets, supporting Vision 2030’s goal of achieving a 70 percent homeownership rate by the end of the decade. By the end of 2023, the homeownership rate had already reached 63.7 percent, surpassing initial projections.

SRC CEO Majid Al-Abduljabbar emphasized that the sukuk issuance demonstrates global investor confidence in Saudi Arabia’s economy. “The listing of the sukuk program 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,” he said.

SRC holds strong credit ratings from Fitch (‘A+’, stable outlook), S&P (‘A’, positive outlook), and Moody’s (‘A2’, positive outlook), reinforcing its solid financial standing.

Established by PIF in 2017 under the supervision of the Saudi Central Bank, SRC aims to provide liquidity to mortgage lenders and facilitate access to affordable housing finance. In January, SRC partnered with Hassana Investment Co. to launch the region’s first residential mortgage-backed securities, further diversifying the financial market and supporting Saudi Arabia’s growing real estate sector.