Hong Kong could see its first Islamic bond issued in the fourth quarter if credit market conditions improve, sources said.
Frank Kwong See-wah, chairman of the Asia Capital Market Association, said several companies had considered issuing 'sukuk' - or Islamic bonds - to broaden their investor base. He did not identify the potential issuers.
'But we may not see the first sukuk in Hong Kong until the fourth quarter as the current timing is not good due to prevailing credit market conditions,' he said.
Global credit markets have been plunged into turmoil and credit spreads have widened significantly as a result of the crisis of confidence over the security of holding fixed-income assets in the wake of defaults triggered by the subprime crisis.
Mr Kwong said potential sukuk issuers also needed time to prepare and structure their bonds better to make sure their first issues would be successful.
Islamic finance has become a hot topic since Chief Executive Donald Tsang Yam-kuen unveiled plans in his policy address in October last year to target investments from Middle Eastern investors. Hang Seng Bank followed up on the address by issuing an Islamic index fund that invests in mainland stocks that comply with Islamic religious law.
