South China Morning Post

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. The new government sukuk will be listed on June 3 in the stock exchange of Hong Kong, Nasdaq Dubai and Bursa Malaysia.

New law may bolster Hong Kong market for Islamic finance

Last year the Financial Services and the Treasury Bureau presented feedback on the consultation on the amendments which were proposed aiming to ease development of an Islamic bond in Hong Kong. The government of Hong Kong has a long-standing policy initiative to develop Islamic finance in the city. As a part of it, the bureau sent out a consultation paper containing detailed proposals for the amendment of relevant tax-related legislation. The key part of the proposal states that a level playing field needs to be created to enable Islamic finance products to be structured in Hong Kong.

Islamic finance finds a rapidly growing niche in the secular world

The last couple of years of financial crisis proved to be unfavourable for the international banking sector. Nevertheless, one sub-sector was growing rapidly and reached significant success - Islamic finance. The majority of people still have not enough understanding and appreciation for Islamic finance. However, the facts show it is a US$1.3 trillion global industry with annual growth of 15% to 20%. During the past few years alone this sector has expanded to even not particularly expected markets adding to the portfolios of conventional international banks. The latter have already made the development of sharia-compliant services a priority.

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