SRC plans Islamic bond issues to fund mortgage drive: report

Saudi Real Estate Refinance Co (SRC) is planning to issue Islamic bonds in coming months to finance its drive to expand the Kingdom’s home mortgage market, Reuters reported, citing chief executive Fabrice Susini.

The state-owned company will begin issuing Riyal denominated sukuk to raise money, but later issue will be in other foreign currencies to attract international investors.

While the initial issues will be private placements, SRC plans to make its first public sukuk issue between SAR 300 million to SAR 500 million in late September or early October, Susini noted.

Founded in 2017 by the Public Investment Fund (PIF), SRC aims to refinance 20 percent of the Kingdom's primary home loans market, which is expected to hope to expand to SAR 500 billion by 2020 from SAR 290 billion now.

Until now, the company has signed memorandums of understanding to provide banks and home finance companies close to SAR 6 billion of financing, through portfolio acquisitions and short-term deals. This month it began offering long-term, fixed-rate residential mortgages (LTFRs)  of 15-20 years through banks and other finance firms.

SRC also aims to jump-start a securitization market in Saudi Arabia, but the technical and legal preparations and other work on the project could take two or three years, Susini said.