Linklaters advises on Hong Kong’s second sukuk issuance

Linklaters has advised the The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank, CIMB Investment Bank Berhad and National Bank of Abu Dhabi PJSC as Joint Bookrunners and Joint Lead Managers on Hong Kong’s second sukuk issuance and its first using a wakalah structure.  The issuance size is US$1 billion with a tenor of five years. 

It follows the success of Hong Kong’s inaugural sukuk offering in September 2014. 

This issue is another important step in positioning Hong Kong as a key player in the Islamic Finance world,” said Linklaters partner Andrew Malcolm, “issues like this, coupled with significant developments such as Stock Connect, are cementing Hong Kong’s status as a leading international finance centre.”

Hong Kong is the first AAA-government to issue sukuk using a wakalah structure. In contrast to last year’s sukuk which was issued using 100% lease assets under an ijarah structure at least 34% of the proceeds of the current issuance will be invested in lease assets with the remainder being invested in a commodity murabahah. 

Partner Kevin Wong commented ”This was the first issuance of sukuk using a wakalah structure out of Hong Kong and needed to be structured carefully to ensure the correct tax treatment under Hong Kong regulations, while continuing to comply with Shari’ah principles.

The Linklaters team was led by Capital Markets partners Andrew Malcolm and Kevin Wong and included counsels Phill Hall and Gloria Cheung.

Linklaters recently advised on the US$1.5 billion sukuk issued by the Government of Malaysia, the first sovereign sukuk of the year. It was the first 30-year sovereign sukuk ever issued and it was the first time that rights to transportation services were used as an asset class.