Hong Kong issues First Islamic Bond

HONG KONG - The government of China's Hong Kong announced the successful offering of its inaugural sukuk on Thursday under the Government Bond Program.

The sukuk, with an issuance size of 1 billion U.S. dollars and a five-year tenor, marks the world's first USD-denominated sukuk originated by a AAA-rated government.

The sukuk was priced on Wednesday at a 2.005 percent profit rate, 23 basis points over five-year U.S. Treasuries.

The Monetary Authority, which represents the Hong Kong government in the offering, said the sukuk saw strong demand from global investors, attracting orders exceeding 4.7 billion U.S. dollars and allowing final pricing to tighten by seven basis points from its initial price guidance.

The sukuk was allocated to over 120 global institutional investors, with 36 percent of the sukuk distributed to the Middle East, 47 percent to Asia, 6 percent to Europe, and 11 percent to the United States.

Financial Secretary John Tsang said the government is pleased to see such strong demand for the inaugural sukuk, signifying an important milestone in the Islamic capital market's development in Hong Kong.

The sukuk is expected to be settled on Sept. 18 and listed on stock exchanges in Hong Kong, Malaysia and Dubai.