Saudi Real Estate Refinance Company’s (SRC) inaugural SAR-denominated residential mortgage-backed sukuk stands out as a pathfinder transaction for Saudi Arabia’s emerging securitisation market.
The transaction introduced the Kingdom’s first residential mortgage-backed securities issuance and created a new Shariah SRC, a Public Investment Fund company licensed by the Saudi Central Bank, plays a central role in providing liquidity and capital solutions to banks and mortgage finance companies, supporting the expansion of residential mortgage finance and home ownership for Saudi nationals. The transaction therefore aligned closely with Saudi Vision 2030 objectives to broaden access to housing finance, deepen capital markets and diversify funding channels for the real estate finance sector.
The deal was notable for adapting a residential mortgage-backed securities (RMBS) structure to a Shariah-compliant format in a market where securitisation remains at an early stage. By securitising residential real estate finance loans, the transaction broadened the range of investment instruments available in Saudi Arabia and established a template for future RMBS and sukuk-backed securitisation activity.
The deal was notable for adapting an RMBS structure to a Shariah-compliant format in a market where securitisation remains at an early stage
The issuance was also important in demonstrating institutional investor appetite for structured credit linked to Saudi housing finance. The transaction played a key role in enhancing liquidity in the real estate finance market, broadening the investor base, helping financing institutions manage capital and risk more efficiently, and supporting the continued development of Saudi Arabia’s capital markets.
HSBC acted as sole structuring adviser, manager, arranger and bookrunner, as well as sukuk holders’ agent, security agent and payment administrator. It also proposed the Shariah-compliant structure used in the transaction.
