HSBC Amanah issued the world’s first SDG Sukuk in October 2018 worth RM500 million (US$112.16 million). The issuance won IFN Deal of the Year 2018 for the social impact category and follows the issuance of HSBC Group’s US$1 billion SDG bond in 2017. Based on the concept of Wakalah Bi Istithmar, the Sukuk facility contributes to SDGs 3, 4, 6, 7, 9, 11 and 13 of good health and well-being; quality education; clean water and sanitization; affordable and clean energy; industry, innovation and infrastructure; sustainable cities and communities; and climate action respectively.
“We are pleased with this issuance that is aimed at starting a conversation in Islamic banking around SDGs and thus supporting value-based intermediation. This successful issuance also demonstrates our continued leadership in Sukuk and contribution to the development of Shariah compliant debt capital markets,” Arsalaan Ahmed, CEO of HSBC Amanah at the time of issuance, said.
The issuance was priced at 4.3% per annum from an initial price guidance of 4.3% to 4.4%. It was the lowest coupon for a five-year non-government guaranteed Sukuk or bond in the Malaysian ringgit market in 2018 on the date of issuance. It was also the tightest spread over the benchmark Malaysian government securities for a financial institution since 2013 and for an Islamic bank in the Malaysian ringgit market since the bank’s inaugural ringgit Sukuk in 2012.
“A world’s first, HSBC’s pioneering ‘SDG Sukuk’ is a prime example of how to create innovative financing for the goals, and marks a milestone in aligning Islamic finance with the SDGs,” Achim Steiner, the administrator of the United Nations Development Programme, commented.
The offering received a final orderbook in excess of RM1.4 billion (US$314.04 million) with a bid to cover ratio of 2.85x from 25 accounts across government agencies and pension funds, financial institutions , insurance companies, asset managers and corporates.
The Sukuk facility is set to mature in October 2023. As at December 2021, 71% of the proceeds have been allocated to green buildings while 75% of the proceeds have contributed to SDG 9 of industry, innovation and infrastructure according to the bank’s 2021 bond and Sukuk report.
HSBC Amanah Malaysia SDG Sukuk 2nd October 2018
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| Summary of terms and conditions | |
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Issuer |
HSBC Amanah Malaysia |
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Size of issue |
RM500 million (US$112.16 million) |
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Mode of issue |
Bookrunning
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Purpose |
To finance eligible businesses and projects in accordance with the HSBC SDG Framework.
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Tenor |
Five years
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Profit rate |
4.3% |
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Payment |
Annual |
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Currency |
Malaysian ringgit |
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Maturity date |
2nd October 2023 |
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Lead manager(s) |
HSBC Amanah Malaysia |
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SDG structuring advisor(s)
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HSBC Amanah Malaysia |
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Bookrunner(s) |
HSBC Amanah Malaysia, Maybank Investment Bank and RHB Islamic Bank |
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Governing law |
Malaysian law |
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Legal advisor(s)/council |
Shook Lin and Bok |
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Islamic structure |
Wakalah Bi Istithmar |
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Rating |
‘AAA(s)’ by RAM Ratings |
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Shariah advisor(s) |
HSBC Amanah Malaysia |
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Investor breakdown |
Government agencies and pension funds (51%), financial institutions (31%), insurance companies (9%), asset managers (8%) and corporates (1%) |