The $1bn sukuk has a five-year tenor and it attracted orders exceeding $4.7 billion globally, recording oversubscription of 4.7 times, allowing final pricing to tighten by 7 basis points from its initial price guidance, the government said.
“The sukuk marks the first US dollar sukuk originated by an AAA-rated government in the global Islamic financial market and signifies an important milestone in the development of the Islamic capital market in Hong Kong,” said John Tsang, Hong Kong’s financial secretary.
Allocation was to 120 institutional investors, about half in Asia, 36% in the Middle East, and the remainder to the US and Europe.
By investor type, 56% was distributed to banks and private banks, 30% to sovereign wealth funds, central banks and supranationals, 11% to fund managers, and 3% to insurance companies.
HSBC and Standard Chartered Bank were joint global coordinators, joint lead managers and joint bookrunners, working with CIMB and National Bank of Abu Dhabi.
The sukuk issuance comes after the legislative changes made in Hong Kong in July 2013, which provide a taxation framework for sukuk issuances comparable to that for issuances of conventional bonds.
Tsang added that the government hopes the strong global response to the sukuk will “catalyse the further growth of the sukuk market in Hong Kong by encouraging more issuers and investors to participate in our market”.