Islamic Finance

HSBC issues first Islamic bond tied to U.N. development goals

| 04 October, 2018
 Bernardo Vizcaino
HSBC issues first Islamic bond tied to U.N. development goals
The HSBC logo is seen at their offices at Canary Wharf financial district in London,Britain, March 3, 2016. REUTERS/Reinhard Krause/Files

OCTOBER 3, 2018 | 10:24PM EDT

HSBC Amanah, the Malaysian Islamic banking arm of HSBC Holdings (HSBA.L), has raised 500 million ringgit ($120.63 million) worth of Islamic bonds linked to the United Nations’ sustainable development goals.

The deal is the latest effort to combine the religious principles of Islamic finance with sustainable development themes promoted by the UN, such as poverty eradication and financing clean energy.

Malaysia’s central bank issued guidelines this week to encourage Islamic banks to become more involved in socially and environmentally themed activities.

Proceeds from the senior unsecured Islamic bonds, or sukuk, will be used to finance businesses and projects that fit the bank’s sustainable development goals bond framework, the issuer said.

The sukuk are due in 2023 and priced at a fixed profit rate of 4.3 percent, which the lender said was the lowest coupon for a five-year non-government guaranteed bond issuance in the Malaysian market this year.

The deal attracted orders of 1.4 billion ringgit, with bids from 25 accounts primarily from government agencies, pension funds and financial institutions.

HSBC Amanah, RHB Islamic Bank Berhad and Maybank Investment Bank Berhad acted as joint lead managers for the transaction.

HSBC issued its first bond tied to the UN Sustainable Development Goals in 2017, raising $1 billion as part of a commitment to provide $100 billion in sustainable financing by 2025.

(Reporting by Bernardo Vizcaino; editing by Eric Meijer)

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