SRC trims spreads as USD 2.75 bn bond attracts 6x demand

SRC tightens bond pricing after strong demand: Saudi Real Estate Refinance Company (SRC) priced a USD 2.75 bn dual-tranche Regulation S bond, drawing more than USD 16.75 bn in orders, around 6x oversubscribed, Zawya reports. The coverage allowed the PIF unit to tighten pricing from its initial guidance.

The details: The USD 1.25 5.5-year tranche priced at 85 bps over US Treasuries, down from initial price thoughts of over 115 bps. The USD 1.5 bn 10-year tranche priced at T+95 bps, from T+125 bps. Orderbooks exceeded USD 8 bn for the shorter tranche and USD 8.75 bn for the longer, excluding joining lead manager interest. The issuance carries a government assurance.

REMEMBER- SRC last accessed international markets with a USD 2 bn issuance last year, also around 6x oversubscribed.

Why it matters: The oversubscription allowed SRC to tighten pricing and lock in lower-cost, long-term funding for its mortgage refinancing business. The proceeds will enable SRC to continue buying mortgage portfolios from local banks, recycling capital into new home lending without straining domestic liquidity. The issuance also moves SRC closer to its goal of raising up to SAR 150 bn (USD 40 bn) through international sukuk by 2030