Saudi Real Estate Refinance Company inks SR1bn deal

Fabrice Susini (from right) of Saudi Real Estate Refinance Company signs the deal with Mazin Al-Ghunaim of Bidaya Home Finance, in front of Saudi Housing Minister Majed Al-Hogail and Abdul Aziz Saleh Al-Omair of Bidaya. (SRC)
Updated 27 December 2017

Saudi Real Estate Refinance Company inks SR1bn deal

LONDON: The Saudi Real Estate Refinance Company (SRC) has signed an agreement with Bidaya Home Finance to purchase a portfolio and provide a mortgage refinancing facility totaling SR1 billion (£266 million).
It marks the second refinancing deal that SRC, which is owned by Saudi Arabia’s Public Investment Fund, has signed in two weeks.
SRC, which was established in October, seeks to free up liquidity in the Kingdom’s mortgage market to promote home ownership.
It acquires, aggregates, and packages portfolios of financing into mortgage-backed securities to sell to domestic and international investors.
The aim is for these transactions to provide lenders with liquidity that will help grow and sustain the real estate financing market.
Saudi Housing Minister Majed Al-Hogail said the SRC deal, announced in a statement issued Wednesday, will help Bidaya offer more accessible home financing and increase home ownership among citizens.
“This agreement is another step in improving the quality of life of our citizens through housing,” he said.
Mazin Al-Ghunaim, CEO of Bidaya, said: “The partnership with SRC will help us expand the range of home finance products and services for our clients, thereby ensuring a more sustainable and robust customer experience.”
Fabrice Susini, SRC’s chief executive, said the company had started increasing the funding available to financial institutions “so they can increase the availability and accessibility of mortgage financing” to Saudi citizens.
“We want to make it possible for the average Saudi to obtain financing so they can own their own home,” he said.
Susini told Arab News earlier this month that the company will actively court international investors to increase liquidity in the Saudi housing market.
SRC has already embarked on “soft discussions” with investors interested in the new market opportunity, he said at the time.
According to Saudi officials, the demand for real estate financing is set to top SR500 billion ($133 billion) by 2026.
But citizens, particularly young people, have been hit in recent years by a Kingdom-wide housing shortage and risk-averse banks wary of lending.
The country has announced plans to raise the rate of home ownership from 47 percent to 52 percent by 2020.


Weekly Energy Recap: OPEC+ keeps market in check

Updated 51 sec ago

Weekly Energy Recap: OPEC+ keeps market in check

RIYADH: Brent crude remained below the $60 per barrel barrier but made a slight rebound over the week to finish at $58.64 per barrel. WTI also achieved a slight weekly rise to $54.87 per barrel.

Global financial markets wobbled with traders and speculators looking to cash out amid fears of a looming global recession — the same driver for current jitters in the oil markets.

Equity market traders and oil future market speculators have been selling after the US Treasury bond yield curve inverted for the first time since 2007. The US short-term bond yields dipped below 10-year. This is a marker for every recession cycle for the past 50 years.

The EIA reported an increase in US crude oil stocks by 1.6 million barrels while market participants expected a drop in US crude oil inventory as US refining runs remained high and utilization increased to 94.3 percent ahead of October refinery maintenance season.

US Refining margins are still strong enough to encourage refiners to keep runs high. The refiners’ output for both gasoline and middle distillate remains strong amid low unemployment in the US that is expected to bolster gasoline demand.

US crude oil inventories typically decline at this time of the year before heading into the fall refinery maintenance season, which is expected to peak in October. So the surprise gain in US crude stockpiles shouldn’t add to the deepening concerns over the outlook for global oil demand — which remains strong.

In China, even though some one million barrels a day of refining capacity went offline during the maintenance season in June and July, China’s refinery throughput in July stood at 12.4 million bpd as the country added newly built or expanded refineries.

While traders continue to worry about a coming global recession and reduced global oil demand as a result, OPEC+ is continuing to stabilize the market.