Sunday, May 31, 2009

First Sukuk Fund By HSBC Amanah

HSBC Amanah, said it will start marketing its first Islamic bond fund as it bids to tap into investors' appetite for the asset class.

The HSBC Amanah Sukuk Fund, domiciled in Saudi Arabia, will comprise sukuk, issued by 12 to 14 companies, mostly in the real estate, commercial banking and utilities sectors based in the Gulf Cooperation Council (GCC) area.

According to a report in Reuters an HSBC spokeswoman said it would seek to raise $100 million for the fund, which has a four-year maturity and will target mid- to high-single-digit annual returns.

Three quarters of the bonds will be issued by corporates with the balance issued by GCC governments.

Unlike a mainstream bond, sukuks generate income for its holders without paying interest. Most of the sukuks included in the HSBC fund will be lease and buy back structures, known as Ijara.

The fund will use private banks in Saudi Arabia and the rest of the GCC as sales intermediaries and will invite investments in dollars, Saudi riyals, Qatari riyals and the Emirati dirhams.

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