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Saudi Real Estate Refinance Company – Moody’s Affirms A2 Issuer Ratings Of Saudi Real Estate Refinance Company; Outlook Remains Stable

Moody’s Affirms A2 Issuer Ratings Of Saudi Real Estate Refinance Company; Outlook Remains Stable

Rating Action: Moody’s affirms A2 issuer ratings of Saudi Real Estate Refinance Company; outlook remains stableGlobal Credit Research – 03 Mar 2022Limassol, March 03, 2022 — Moody’s Investors Service (“Moody’s”) has today affirmed Saudi Real Estate Refinance Company’s (SRC) issuer ratings at A2/P-1. At the same time, the rating agency affirmed the Aa2.sa/SA-1 national scale issuer ratings and the baa3 Baseline Credit Assessment (BCA). The outlook assigned to SRC remains stable.RATINGS RATIONALEMoody’s decision to affirm SRC’s baa3 BCA captures the company’s solid asset quality (non-performing financings of 0.2% as of September 2021) and strong capitalization (tangible common equity to total tangible assets of 45% as of September 2021), which are moderated by a still evolving profitability profile (0.7% of average managed assets as of September 2021), high reliance on wholesale funding and concentrated exposure to the relatively new mortgage market in Saudi Arabia.In turn, SRC’s A2 long-term issuer ratings incorporate four notches of rating uplift from its baa3 BCA, derived from Moody’s assumption of a very high probability of support from its 100% shareholder, the Public Investment Fund (PIF, Saudi sovereign wealth fund). Moody’s support assumptions also capture SRC’s important policy mandate of increasing home ownership among Saudi nationals.The decision to impute parental support uplift in SRC’s ratings follows Moody’s assignment of first time A1 long-term issuer rating and a1 BCA to the PIF, in February 2022. In light of these assignments, Moody’s no longer considers appropriate to rate SRC under the Government-Related Issuers (GRI) Methodology as Moody’s does not normally designate subsidiaries of a GRI as also being GRI. The removal of the GRI status has no rating implications as the government support uplift previously incorporated in SRC’s A2 long-term issuer rating under the GRI Methodology is now routed through PIF.STABLE OUTLOOKThe stable outlook on SRC’s issuer rating reflects the resilience of the operating environment in Saudi Arabia and the expectation that the capacity of PIF to support SRC will remain unchanged. The stable issuer outlook further balances SRC’s strong capital and assumptions that PIF support will be forthcoming in case of need, against the high reliance on wholesale funding and evolving profitability.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSSRC’s ratings could be upgraded if PIF’s capacity to support it further improves, as this is indicated by an upgrade of its BCA. Upward pressure on SRC’s issuer ratings could also materialise following improvements in SRC’s funding and profitability metrics, while maintaining its strong asset quality and capitalisation.Downward pressure on the SRC’s issuer ratings could materialise following (1) a weakening PIF credit profile that impacts its capacity and/or willingness to support SRC; (2) severe losses on SRC’s mortgage portfolio that erode a significant portion of its capital; and/or (3) the company failing to adequately manage its assets and liabilities mismatch leading to heightened liquidity and market risks.PRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Finance Companies Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187099. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Moody’s National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody’s global scale credit ratings in that they are not globally comparable with the full universe of Moody’s rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a “.nn” country modifier signifying the relevant country, as in “.za” for South Africa. For further information on Moody’s approach to national scale credit ratings, please refer to Moody’s Credit rating Methodology published in May 2016 entitled “Mapping National Scale Ratings from Global Scale Ratings”.

While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons.

The local market analyst for this rating is Ashraf Madani, +971 (423) 795-42.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form.

Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.

For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK.

Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Christos Theofilou, CFA Vice President – Senior Analyst Financial Institutions Group Moody’s Investors Service Cyprus Ltd. Porto Bello Building 1, Siafi Street, 3042 Limassol PO Box 53205 Limassol CY 3301 Cyprus JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Constantinos Kypreos Senior Vice President Financial Institutions Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody’s Investors Service Cyprus Ltd. Porto Bello Building 1, Siafi Street, 3042 Limassol PO Box 53205 Limassol CY 3301 Cyprus JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

Moody's Affirms A2 Issuer Ratings Of Saudi Real Estate Refinance Company; Outlook Remains Stable
AIHS 2022

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MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001.

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Source: finance.yahoo

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