Islamic Banking
KFH to sell Islamic bonds for Chinese firm
By The Star Business
Sep 21, 2006, 10:37

KUALA LUMPUR: Kuwait Finance House (M) Bhd (KFH Malaysia) will start selling Islamic bonds worth up to US$250mil for a Chinese firm in November, said managing director K. Salman Younis.

The sukuk bond issuance, expected to be between US$200mil and US$250mil, is believed to be the first by a company from China.

"We have completed the due diligence and legal process for the sukuk issue," Salman said at a press briefing on the group's achievements since its started local operations a year ago.

The bonds will be sold in two maturities, one ending in five years and the other in 10 years. The issuance is expected to attract international investors, particularly from Persian Gulf countries where KFH is based.

"It would help boost Malaysia's reputation as an international Islamic financial hub," Salman said.

Meanwhile, KFH Malaysia is in talks with several government-linked companies (GLCs) to participate in a number of real estate investment trust (REITs) issuances.

Salman said KFH Malaysia had made presentations to several GLCs and hoped to seal at least one deal by the end of the year.

KFH Malaysia, the country's first foreign Islamic bank, started operation last August, focusing on corporate and commercial banking business.

To broaden its income base, the bank plans to aggressively expand retail offerings like syariah-compliant housing loans, hire purchase and credit cards.

A second branch in the country, located in Shah Alam, Selangor, is scheduled to open by the end of this year.

“To date, we have obtained Bank Negara approval for 44 products and over the next three years, we hope to open five more branches,'' Salman said.

He added that most of the products developed by KFH Malaysia “are new to the market,” citing example like the KFH Promissory FX Contract-i, which offers hedging mechanism to protect customers against foreign exchange fluctuations.

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