Dubai: Hong Kong’s government plans to issue as much as $1 billion (Dh3.67 billion) worth of Islamic bonds later this year, a spokesperson for its central bank said, suggesting the territory’s debut sukuk issue might be larger than initially expected.

Lawmakers in Hong Kong passed a bill last month that will allow the AAA-rated government to issue sukuk for the first time. A report by the territory’s Legislative Council indicated the size would be around $500 million.

But a spokesperson for the Hong Kong Monetary Authority, responding in an email on Tuesday to questions from Reuters, said the preliminary plan was for a US dollar-denominated issue of at least $500 million and maybe as much as $1 billion.

“The sukuk is expected to be launched after the summer holidays,” the spokesperson said.

This would imply an issue as soon as September.

Details of the plan are subject to confirmation but the sukuk are expected to have a maturity of five years or below and use the ijara structure, a common sale and lease-back format in Islamic finance, the spokesperson added.

The sukuk, aimed at international institutional investors such as central banks, sovereign wealth funds and pension and other funds, would use state-owned properties in commercial premises as their underlying assets. They would be listed in Hong Kong and some other major Islamic centres, the HKMA said.

A debut sukuk from Hong Kong would boost its Islamic finance credentials and help position the territory as a gateway between mainland China and investors in the Gulf and south-east Asia, the two main centres for Islamic finance.

Other conventional banking centres are also seeking to burnish their Islamic credentials with debut sovereign sukuk issues.

The United Kingdom Prime Minister David Cameron said last year that Britain intended to issue sukuk worth around £200 million ($335 million, Dh1.2 billion), while Luxembourg envisages a roughly €200 million (Dh1.01 billion) issue.

Both issues could come as soon as this year, but Hong Kong appears to be ahead of the other two centres in its technical preparations for the sale.