The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
The programme, denominated in Brunei dollars, involves the issue of short-term ôSukuk al-Ijaraö which are effectively asset-backed lease securities that are compliant with Islamic law, or Shariah. It is also the first Ijara-based Islamic money market programme ever implemented anywhere in the world.
Launched on April 6, but only just announced to the media, the transaction was a fully-allocated offering of Bru$150 million. Pricing was Singapore Interbank Offered Rate (SIBOR)-3.75 basis points, with a yield of 3.4% for a three-month paper. Distribution went to domestic institutional investors and foreign commercial banks operating in Brunei.
"The government wanted to limit the distribution of the Sukuk to onshore-based banks for the maiden issue," explains Joel Consing, HSBC's managing director and head of financing solutions group, Asia Pacific.
The launch follows last year's announcement by Sultan Haji Hassanal Bolkiah Muizzaddin Waddaulah of the development of a capital market in Brunei based on Islamic principles of Shariah.
HSBC Amanah, the Dubai-based Islamic finance division of the HSBC Group, has been involved in some of the worldÆs most prominent Sukuk transactions, including, in 2002, the first-ever sovereign Sukuk transaction, MalaysiaÆs $600 million Sukuk Al-Ijara. Since then, HSBC Amanah has been lead manager of Sukuk transactions for Qatar, Dubai, Pakistan and a number of corporate issuers.
"This programme will not only help develop a local capital market but also encourage other entities in Brunei to issue Sukuks themselves," says Asad Zafar, the Dubai-based managing director of the asset finance advisory group, HSBC Amanah. "This will in due course provide opportunity to the public to invest in domestic projects based on Shariah principles, rather than send their money abroad."
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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