PIF’s Saudi Real Estate issues $933m sukuk

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Sukuk worth SAR3.5 billion ($933.17 million) to expand funding in Saudi Arabia’s real estate sector has been issued by the Saudi Real Estate Refinance Company.

The offering from the company, which is wholly owned by the kingdom’s Public Investment Fund, makes up the final two tranches under its SAR20 billion government-guaranteed sukuk programme. 

The issuance was offered in five and seven-year dual tenors, the company said in a statement.

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Sukuk are Sharia compliant bonds developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under Sharia law.

Fabrice Susini, CEO of the Saudi Real Estate Refinance Company (SRC), said the issuance had garnered interest from institutional investors, reinforcing confidence in the local market. 

“By providing banks and real estate finance companies with liquidity, SRC enables further development in the home financing sector, increasing homeownership rates among Saudi citizens,” he said.

HSBC acted as lead coordinator, while the joint lead managers were Aljazira Capital, HSBC Saudi Arabia, Al Rajhi Capital, and SNB Capital.

In August SRC signed an agreement with Riyad Bank to acquire a real estate financing portfolio worth SAR500 million.

Under the Vision 2030 programme, Saudi Arabia aims to raise the percentage of residential ownership from 47 percent to more than 60 percent.