Hong Kong government sells second Islamic sukuk bond to raise US$1.1 billion

Hong Kong Government has successfully sold its second Islamic sukuk bond to raise US$1 billion in its latest effort to promote Islamic finance in the city.

The Hong Kong Monetary Authority, which handled the issue on behalf of the government, said on Thursday that the issue was popular and it received US$2 billion in orders from 49 global institutional investors including central banks and sovereign funds among others. The orders were double its US$1 billion issue size.

The five-year bond was priced at 1.894 per cent, which is lower than last year’s issue and is 35 basis points over 5-year US Treasuries.

John Tsang Chun-wah, Financial Secretary of the city and who has been promoting Islamic finance since 2007, said the two successful issues of government sukuk bonds shows Hong Kong could be a platform for Islamic bond offerings.

“Building on the momentum from the successful issuance of the inaugural sukuk last year, the latest issuance strengthens our relationship with global investors and demonstrates the flexibility of Hong Kong’s Islamic finance platform,” Tsang said.

The sukuk issue’s structure and investment guidelines were set according to Muslim religion requirements. But brokers said the few number of Islamic followers in the city and a lack of understanding of the products has resulted in no corporate sukuk offerings here.