Saudi Real Estate Refinance Co delays dollar sukuk launch due to market volatility

  • Saudi sovereign wealth fund PIF will eventually list the company
  • SRC closes largest mortgage refi for Saudi bank
  • The first dollar sukuk moved from the first to the second quarter
  • Rate hikes to drive up mortgage rates

DUBAI, March 14 (Reuters) – The Saudi Real Estate Refinance Company (SRC), the equivalent of U.S. mortgage finance firm Fannie Mae, will postpone plans to launch dollar-denominated Islamic bonds until the second quarter, its chief executive said. General manager.

SRC CEO Fabrice Susini said in November he expected the deal in the first quarter if market conditions allowed.

Debt markets, already nervous about impending interest rate hikes, came to a virtual standstill following Russia’s invasion of Ukraine. Several Gulf issuers that have already mandated banks for transactions are waiting for a window of stability, bankers said.

Join now for FREE unlimited access to Reuters.com

Register

The SRC plans to launch two international and two domestic debt securities sales this year.

Combined domestic shows are expected to bring in between 3 and 6 billion riyals ($800 million to $1.6 billion) and international sales are expected to bring in $1 billion or possibly more in total, Susini said in an interview with Reuters. .

SRC announced on Sunday that it had purchased a billion-riyal mortgage finance portfolio from the Saudi National Bank (SNB) (1180.SE), the largest such mortgage refinance for a bank to date. Susini said discussions were underway with the SNB and other banks for similar transactions.

Rising interest rates will lead to higher mortgage rates for Saudis at some point this year, Susini said.

SRC is working to help Saudi Arabia achieve its goal of increasing Saudi home ownership to 70% as part of its “Vision 2030” reforms to reduce the economy’s dependence on oil. The rate is around 62% now, Susini said, about the same as a year ago.

A possible IPO is in the cards for SRC, which is owned by Saudi sovereign wealth fund the Public Investment Fund (PIF), but it is not currently on the agenda, Susini said.

“Yes, one day they will… I think it would make sense for PIF to think about it because we are a company that works for the market as a whole and, to some extent, opens up capital to stakeholders , to the markets, would make sense.”

($1 = 3.7515 riyals)

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Yousef Saba; Editing by Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

About Scott Conley

Check Also

Taking out a home equity loan while rates are rising

Interest rates are rising rapidly, and many believe they will continue to rise throughout the …