Sichuan Development Holding seeks $300 mln in Islamic financing

Alpha Integrated Real Estate Investment Trust

26/11/2015 24:50

By Bernardo Vizcaino 
    Nov 26 (Reuters) - A unit of Sichuan Development Holding Co 
(SDH) SICHAE.UL  plans to raise $300 million via Islamic 
financing in the first quarter of next year, and plans a 
subsequent $1 billion Islamic bonds (sukuk) programme, according 
to the firm advising on the deal. 
    The proposed transaction would be a first for a Chinese 
state-owned company and adds to a growing pipeline of sharia 
compliant deals by mainland firms seeking to diversify their 
funding sources.  ID:nL5N11807P  
    The three-year financing would be raised by the leasing arm 
of SDH, an investment arm of the Sichuan provincial government, 
said Bobby Tay, an advisor for Singapore-based Silk Routes 
Financials. 
    Murabaha is a common cost-plus sale arrangement in Islamic 
finance. 
    There are now five Malaysian and Singapore banks seeking to 
win the mandate, which could be via sukuk or a murabaha-based 
syndicated loan, said Tay, also chief strategy officer of Sabana 
Shariah Compliant Industrial REIT  SABA.SI . (Murabaha is a 
common cost-plus sale arrangement in Islamic finance.) 
    "After this deal they want to do a $1 billion Islamic MTN 
(medium term notes) programme, most likely setup in Singapore. 
They want to be the first in the market," said Tay. 
    There is also interest from a government-owned bank which is 
considering whether to establish an Islamic arm under an onshore 
securities license, said Tay, who declined to name the lender. 
    "They are looking for advice on Islamic finance and banking 
options. They have looked at the experience of both Sabana and 
of Singapore." 
    Sabana, set up in 2010 and the world's largest listed 
sharia-compliant real-estate investment trust or REIT, has used 
both murabaha and sukuk for its funding needs.  
    Singapore launched a sovereign sukuk programme in 2009, a 
first for a non-Muslim majority country, since then issuing a 
total of eight sukuk worth a combined S$600 million ($427.5 
million). 
    Despite low borrowing costs in the onshore bond market, 
Islamic financing is increasingly seen as an alternative funding 
option for Chinese firms to tap liquidity from investors in the 
Gulf and Southeast Asia. 
    In October, Chinese property developer Country Garden 
Holdings Company Ltd  2007.HK  said it planned a debut sale of 
sukuk via its Malaysian subsidiary.  ID:nL8N126028  
    HNA Group  HNAIRC.UL , owner of Hainan Airlines, plans to 
raise up to $150 million in Islamic loans, while its financing 
arm is also considering an offshore sukuk.  ID:nL5N11807P  
 
($1 = 1.4035 Singapore dollars) 
 
 (Reporting by Bernardo Vizcaino; Editing by Eric Meijer) 
 ((Bernardo.Vizcaino@thomsonreuters.com; Telf: +61293218168; 
Reuters Messaging: 
bernardo.vizcaino.thomsonreuters.com@reuters.net)) 
 
Keywords: ISLAM FINANCING/CHINA