Dubai to get spillover boost from Aramco listing says DIFC chief

Dubai International Financial Center (DIFC) Governor Essa Kazim. (Photo courtesy: social media)
Updated 11 November 2017
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Dubai to get spillover boost from Aramco listing says DIFC chief

DUBAI: Dubai is set to benefit from the spillover effect of a Saudi Aramco listing and other market reforms underway in Saudi Arabia, according to the chief of the emirate’s financial hub
The planned listing of Saudi Aramco and the opening of financial markets in Saudi Arabia will “increase the pie” of financial services in the region, said Dubai International Financial Center (DIFC) Governor Essa Kazim, in an interview on the sidelines of a World Economic Forum meeting in Dubai.
“Opening Saudi is completely a positive for the whole region,” said Kazim. “Our market is highly interactive with the Saudi market, so the investment flow that would come to Saudi would have a spillover into our market.
“So we are very much supportive of Saudi opening up , reforming, restructuring and meeting their 2030 Vision. It’s good for the whole region,” he said.
The planned listing of Saudi Aramco could be worth about $100 billion based on a 5 percent offering – about four times the size of the existing record held by Chinese e-commerce giant Alibaba, which listed in 2014.
London and New York are among the international financial centers seeking to attract the prized Aramco share sale, which represents a touchstone for wider financial reforms underway in the Kingdom, as it opens up to increased foreign investment.
DIFC reported a 14 percent rise in the total number of firms last year despite a prolonged period of oil price weakness that contributed to economic jitters in the emirate.
Kazim said that despite wider economic headwinds facing the region, DIFC had managed to double the number of new occupiers at about 300 on an annual basis over the last three years – compared to the previous three years.
“That means companies are still coming here despite geopolitical issues,” he said. “Life and business has to go on.”
He said that the business park remains 99 percent occupied as it expands with new buildings under development.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.