Economy
Saudi Arabia’s Fannie Mae Plans $2.3 Billion in Sukuk Sales

Saudi Arabia’s first mortgage-refinancing firm is set to debut in the bond market with a plan to raise as much as 8.5 billion riyals ($2.3 billion) this year as the kingdom seeks to expand home ownership.
The Saudi Real Estate Refinance Co., the state-run equivalent of Fannie Mae and Freddie Mac in the U.S., will tap domestic and international debt buyers with Islamic bonds, Chief Executive Officer Fabrice Susini said in an interview in Riyadh on Wednesday. The refinance firm aims to fund around 80 percent of its assets with debt or loans, he added.
Saudi Arabia has taken a number of measures to increase home construction and lending as it seeks to overcome one of the world’s lowest mortgage penetration rates. For years, the absence of financing firms like SRC limited the ability of banks to expand their mortgage books amid central-bank limits on loans to any one sector.
The refinancing firm, which started in end of 2017, has been operating for one year. It was started with 5 billion riyals in capital and has been working closely with the government’s Real Estate Development Fund. The fund also provides interest-free loans to middle and low-income citizens through commercial banks.
The SRC plans to sell sukuk domestically in the next two quarters and will tap international investors by the end of the year, the CEO said.
Public Offering
“We may look at a public offering rather than purely private placement,” Susini said. The plan then would be to issue around 1 billion riyals, which “would be a decent size for a first international issuance.”
Some of the funds raised will be funneled to commercial lenders to be given as mortgages to citizens complying with state-set criteria to help provide affordable housing to citizens often ignored by banks, the CEO said.
The refinancing firm expects to buy 7 billion riyals to 10 billion riyals in mortgage portfolios held by banks and mortgage providers this year, Housing Minister Majed Al-Hogail told Bloomberg in an interview in Riyadh on Wednesday. Susini said most of those portfolio purchases will likely come from mortgage finance companies not banks.
“The mortgage finance companies, up until the creation of SRC, were very much dependent on the banks in terms of refinancing,” he said. “As we come with a new offer that is competitive, they will be more incentivized to work with us.”
-
OER Magazines1 month ago
OER, April 25
-
Alamaliktistaad Magazines1 month ago
Al-Iktisaad, April 25
-
Renewables3 weeks ago
Jindal Renewables and OQ Alternative Energy Sign Joint Development Agreement to Advance Integrated Renewable Power Projects in Oman
-
Banking & Finance2 months ago
Bank Nizwa Signs MoU with Ministry of Endowments and Religious Affairs to Enhance Endowment Management & Islamic Finance Frameworks
-
News2 months ago
Oman Signs Historic Agreement to Establish World’s First Liquid Hydrogen Corridor to Europe
-
Renewables1 month ago
Sembcorp’s 588MW Solar Power Plant In Oman Begins Commercial Operation
-
Banking & Finance1 month ago
How Bank Muscat is Pioneering Digital Solutions to Empower Customers
-
Business3 weeks ago
Tawoos Group acquires NMC Oman
You must be logged in to post a comment Login