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The following is issued on behalf of the Hong Kong Monetary Authority:
The Government of the Hong Kong Special Administrative Region of the People's Republic of China (the "HKSAR Government") today (May 28) announced the successful offering of its second sukuk (the "Sukuk") under the Government Bond Programme.
The Sukuk, with an issuance size of US$1 billion and a tenor of 5 years, is the second USD-denominated sukuk issued by the HKSAR Government, subsequent to the inaugural issuance in September 2014. The Sukuk uses Wakalah structure, where one-third of assets underpinned by selected units in an office building in Hong Kong, and two-third of the assets underpinned by shariah-compliant commodities. Hong Kong is the first AAA-government sukuk issuer to adopt a Wakalah structure.
Following a global roadshow commencing May 18, 2015, covering Riyadh, Jeddah, Dubai, Abu Dhabi, Kuala Lumpur, Hong Kong and London, the Reg S USD Sukuk was priced on May 27, 2015 at 1.894% (35 basis points over 5-year US Treasuries). The Sukuk received warm welcome from global investors, attracting orders of US$2 billion, which was 2 times the issuance size. Despite the volatility observed in the international bond market and the large movements of sovereign bond yields within a short period of time, benefitting from the investor confidence in Hong Kong's credit strengths and the strong demand for high quality sukuk, the final pricing was set at the tight end of the initial price guidance. The cost of funding was at a very low level of 1.894%, which was lower than that for the inaugural sukuk issue in 2014.
The deal attracted interest from a diverse group of conventional and Islamic investors. Orders were received from 49 global institutional investors, and 42% of the Sukuk were distributed to the Middle East, 43% to Asia and 15% to Europe. By investor type, 77% was distributed to banks, private banks and fund managers, and 23% to sovereign wealth funds, central banks and supranationals.
"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. Compared with Ijarah structure of the inaugural sukuk which requires underlying tangible assets of at least 100% of issuance amount, this latest structure allows the use of substantially less tangible assets, which is one-third of issuance amount, for this purpose. The use of the 'asset light' structure can set a benchmark for potential issuers in the private sector," the Financial Secretary, Mr John C Tsang, said.
Mr Tsang added, "The success of the two issuances demonstrates not only the viability of sukuk issuance using Hong Kong's platform, but also the recognition among international investors of Hong Kong's economic fundamentals and financial structure. I hope that the sukuk issuance will catalyse further growth of the sukuk market in Hong Kong and attract more issuers and investors to participate in our Islamic finance platform."
The Sukuk is issued by a special purpose vehicle, Hong Kong Sukuk 2015 Limited, established and wholly owned by the HKSAR Government. The Sukuk is expected to be settled on June 3, 2015 and listed on the Hong Kong Stock Exchange, Bursa Malaysia (Exempt Regime) and NASDAQ Dubai. The Sukuk was assigned credit ratings of AAA by Standard and Poor's and Aa1 by Moody's.
The Hong Kong Monetary Authority acts as the HKSAR Government's representative in the Sukuk offering under the Government Bond Programme. The primary objective of the Government Bond Programme is to promote the further and sustainable development of the local bond market.
HSBC and Standard Chartered Bank acted as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners, and CIMB and National Bank of Abu Dhabi PJSC acted as Joint Lead Managers and Joint Bookrunners for the Sukuk offering.
DISCLAIMER:
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW.
THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW. THE MATERIAL SET FORTH HEREIN IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES FOR SALE INTO THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE LAWS. A RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD ANY SECURITIES AND MAY BE SUBJECT TO SUSPENSION, REDUCTION OR WITHDRAWAL AT ANY TIME BY THE RATING AGENCY. FCA / ICMA STABILISATION APPLIES.
Ends/Thursday, May 28, 2015
Issued at HKT 00:17
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