Major mortgage bonds launched

BAHRAIN launched what officials hailed as the Gulf region's first residential mortgage bonds.

The BD30-million bonds scheme will help build government housing and provide mortgages for Bahraini families.
It was launched by the government-owned Eskan Bank (formerly the Housing Bank), chaired by Works and Housing Minister Fahmi Al Jowder.
The launch ceremony, at the Ritz-Carlton Bahrain Hotel and Spa, was attended by Central Bank of Bahrain governor Rasheed Al Maraj, Industry and Commerce Minister Dr Hassan Fakhro and other dignitaries.
The first Residential Mortgage Backed Securitisation (RMBS) transaction was launched under an agreement signed by several supporters and Eskan Bank – the leading mortgage provider to Bahrainis.
Bonds worth BD30 million will be issued with the aim of diversifying the bank's sources of funds, by tapping into the capital markets.
The bank will use the funds from the scheme to support government housing and mortgages for Bahrainis.
These are the first bonds to be licensed by the Central Bank of Bahrain under the Financial Trusts Law it issued last year.
The issue is being launched with the co-operation of Aseambankers Malaysia Berhard, the investment arm of Malaysia’s largest commercial bank Maybank.
“It marks the first issue of residential mortgage backed securities in the GCC,” Mr Al Jowder said. “It is a way of trying to provide the housing bank with access to liquidity from the capital markets, in order to support government initiatives to support social housing as well as other means of lending, in terms of mortgages.”
Aseambankers chief commercial officer Tracy Ong said the RMBS was an excellent platform for Eskan Bank to diversify its funding sources, by tapping the capital markets.
“With access to increased funding Eskan Bank can ultimately serve the financial needs of a larger section of the country's population," she said.
The new RMBS bonds will be issued for four different terms – BD8.5 million will be in three-year bonds, BD6m over five years, BD6.5 million over seven years and BD9 million over 10 years.
Minimum subscription is BD100,000 and the bonds have already been 1.74 times oversubscribed.
Eskan also announced that it has set up a new firm, Eskan RMBS Company, which has been incorporated as a wholly- owned subsidiary of the bank to act as the issuer of the bonds.