KFH – Bahrain launches first mortgage-backed securities

TDT | Manama

The Daily Tribune – www.newsofbahrain.com

Kuwait Finance House (KFH) – Bahrain have 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 where sukuk holders are the ultimate beneficiaries of the financing portfolio.

It is a passthrough structure, where all the risks and rewards are transferred to the investors.

The “Mazaya” social housing scheme is a well-established and successful programme by the Ministry of Housing, Eskan Bank, and local banks, which has been beneficial to Bahrain.

This is the second issuance under the Securitization Programme and follows the success of the first issuance, well received by the market.

Commenting, Abdulhakeem Alkhayyat, Managing Director and CEO at KFH - Bahrain, said: “The issuance of mortgage-backed securities would greatly stimulate the housing market, which is considered one of the largest contributors for economic growth.”

Besides, Rashid Alkhan, Head of Wealth Management, said: “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 allows our clients to diversify their investment portfolio and improve their returns by distributing their exposure across a portfolio of assets.”

The Programme also allows non-KFH Bahrain financing portfolios, where the bank acts as an arranger.

“This provides a wonderful platform for any financial institution regulated by the CBB or any government-owned entity to securitize assets.”