Kuwait Finance House (KFH) – Bahrain, one of the leading Islamic banks and an integral contributor to the evolution of Bahrain’s Islamic Financial sector, has announced the launch of the first-of-its-kind Shari’a compliant mortgage-backed securities.
The launch involves the issuance of sukuk against a portfolio of Ijara (lease) financing contracts related to the “Mazaya” social housing finance scheme, in which the sukuk holders become the ultimate beneficiaries of the financing portfolio, said a statement.
It is a pass-through structure where all the risks and rewards are transferred to the investors. The “Mazaya” social housing scheme is a well-established and successful program by the Ministry of Housing, Eskan Bank, and local banks, which has been beneficial to the Kingdom of Bahrain, making it an attractive asset class for investors to own. This is the second issuance under the Securitization Program and follows the success of its first issuance, which was well received by the market.
Abdulhakeem Alkhayyat, Managing Director and CEO at KFH - Bahrain, said: “We are pleased with the successful launch of this issuance, which is primarily attributed towards the regulatory and professional support from the Central Bank of Bahrain, the efforts of our Wealth Management team, and the trust of our investors in the bank. The issuance of mortgage-backed securities would greatly stimulate the housing market, which is considered one of the largest contributors for economic growth. All stakeholders would benefit from this, as financial institutions can increase their ability to finance housing units, while development plans can be accelerated, which ultimately makes the market more efficient and gives customers greater access to capital. Furthermore, the continuous launch of asset-backed securities will positively contribute to the development of the capital markets in Bahrain by having diverse products for eligible investors.”
Rashid Alkhan, Head of Wealth Management, commented: “Mortgage-backed securities are well-established in global markets, and we are honoured to be the first Islamic retail bank to launch this in the Kingdom of Bahrain. It gives our clients an opportunity to diversify their investment portfolio and improve their returns by distributing their exposure across a portfolio of assets. Giving our clients access to an investment backed by a portfolio of tangible and well-collateralized assets is very timely in light of the current volatility of the global financial markets. This product is considered a valuable addition to the suite of wealth management products and services at KFH-Bahrain.” – TradeArabia News Service
