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RIYADH: Saudi Real Estate Refinance Company (SRC), the mortgage finance giant owned by the Kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), is considering an international bond issue this year, possibly in the United States, its CEO told Arab News.

The CBC last month issued a SR 4 billion ($ 1.07 billion) domestic sukuk – the Islamic equivalent of a bond – intended to provide liquidity to the Kingdom’s housing market. CEO Fabrice Susini said the CBC’s current balance sheet had more than tripled between late 2019 and late 2020, but he did not rule out returning to the market for another injection of capital.

“We are following a strategy of diversification and access to liquidity and financial markets. We can tap the market again. At the moment, we are working on an international program because, alongside the domestic issuance, we are considering the possibility of issuing in the US market. We can do an inaugural issue before the end of the year, ”he said.

Established in 2017 and wholly owned by the PIF, the SRC is often referred to by Reuters as the Saudi equivalent of US mortgage finance giant Fannie Mae.

In its review this week of Saudi Arabia‘s Vision 2030 programs, the Economic and Development Council noted that the homeownership rate in the Kingdom has risen to 60%, from 47% five years ago. years.

HIGHLIGHT

The CBC issued a $ 1.07 billion domestic sukuk – the Islamic equivalent of a bond – last month, intended to provide liquidity to the Kingdom’s real estate market.

Susini said he was confident the Kingdom could meet its goal of 70% homeownership by the end of the decade. “This is a long-term goal that the housing ecosystem set itself in 2017 when the process was launched. There was an interim target to achieve 60% homeownership by 2020 and at the moment we are ahead of the target.

The CBC had also set its own target of achieving a 10% share of total residential mortgages by the end of 2020. However, it is currently below that target as it took longer than expected to. as the market takes off.

“We are reaching a satisfactory level for the moment. There is an element of market development that will allow us to reach the level of market share. We are a little behind our target of 10% by 2020, but we are convinced that we will reach the target of 20% by 2027, ”said Susini.

The market is certainly changing rapidly. The total value of mortgages jumped 88% to RS 105.52 billion in the first 10 months of 2020, according to figures from the Saudi Central Bank, and the CEO of the SRC said he predicts growth even more important in 2021. the supply, we have a demand. So I see a big fundamental trend that will continue for a few years, ”he said.

A recent endorsement of the SRC’s strategy came earlier this month when it received a long-term A2 issuer credit rating from influential rating agency Moody’s. At the same time, the SRC also received a long-term issuer credit rating of A from Fitch Ratings.

“These notes illustrate the continued efforts of the SRC to provide the necessary liquidity to the Kingdom’s housing sector, helping to increase the rate of Saudi citizens owning their first homes,” said Susini.


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