Housing Development Finance Corporation launches first corporate Sukuk in Maldives - IFN

Housing Development Finance Corporation launches first corporate Sukuk in Maldives

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MALDIVES: The Housing Development Finance Corporation of Maldives (HDFC) has launched a Sukuk Mudarabah of up to MVR50 million (US$3.2 million) on the 11th September. Based on a prospectus by the issuer, the issuance will be open for subscription on the 1st October. The HDFC is seeking to utilize the funds obtained from the auction to provide Shariah compliant mortgage financing facilities under its Islamic window, HDFC Amna. Launched in December 2012, HDFC Amna recently recorded a housing portfolio of MVR29 million (US$1.86 million) in the first quarter. HDFC was incorporated in 2004 and operates as a state-owned enterprise with a diverse shareholding comprising the government of Maldives (49%), International Finance Corporation (18%), Asian Development Bank (18%) and HDFC Investments India (15%). Subscriptions are open to any individual or corporate legal entity that is permitted to transact on the Maldives Stock Exchange (MSE), at a starting bid of MVR500 (US$32.07) per certificate. Subscriptions will close on the 27th November 2013. The papers hold a maturity of 10 years from the allotment date with a semi-annual profit share ratio of 65:35. The Sukuk offered will be eligible for trading on the MSE and is governed according to the laws of Maldives. Advising on the deal is Mazlan & Murad Law Associates, together with Aishath Muneeza, the head of Islamic finance at the Capital Markets Development Authority of the Maldives and Islamic Finance news’ correspondent, as the Shariah advisor. The banks involved in the transaction are Maldives Islamic Bank and Bank of Maldives, while KPMG is the deal’s auditor. The Sukuk is also part of the company’s strategy to leverage its capital base on a broader portfolio of Islamic debt instruments which will look to include local investors. In addition, HDFC also aims to create a secured low risk, long-term Shariah compliant investment avenue for Takaful operators, pension authorities, government and private corporations as well as members of the public. Legislations have been passed in the country to remove tax impediments and introduce tax incentives for the issuance and listing of Sukuk as a result of an IDB initiative dubbed the Sukuk Market Development Project which was mobilized in March.