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Saudi rolls out its second mortgage-backed securitization: PIF-owned Saudi Real Estate Refinance Company (SRC) has launched the kingdom’s second residential mortgage-backed securities (RMBS), bundling mortgages from six lenders worth some SAR 420 mn. That issuance could free some 0.1% of lending liquidity in the Saudi market, by our math.
The issuance is backed with credit ratings from Fitch and Moody’s, unlike the first issuance. Both credit rating agencies gave the securities the highest possible rating on a national scale — a feat that SRC CEO Majeed Al Abduljabbar said would draw more institutional investors into the issuance.
REMEMBER- Saudi markets are now awaiting final securitization rules. Tadawul is now reviewing public comments on drafted amendments for capital market rules that would give securitization and asset-backed issuances their own framework, but it’s not clear when the rules will become final. The Capital Markets Authority’s rules make credit rating mandatory for public asset-backed offerings, and this deal already meets that bar
BACKGROUND- The SRC’s debut RMBS took place last year, but the size of the issuance was not disclosed. The PIF-backed company currently sits on more than SAR 10 bn in mortgages it bought from Rajhi Bank alone, giving it a big portfolio to securitize in tranches as it sees fit.
Why this matters: The SRC-led push to securitize mortgages would help free up much needed liquidity to finance new priorities as the Kingdom recalibrates its gigaproject ambitions and trims public spending. The banking sector’s loan-to-deposit ratio hit 113% at end-2025, and Fitch expects lenders to lean on RMBS to free up some lending capacity from the SAR 726 bn (USD 193.3 bn) currently tied in mortgage books.
Watch next: More securitization issuances are best suited when rates are down, but global central banks, including SAMA, are hiking rates, making pricing mortgage-backed issuances painful for the banks.
