KUALA LUMPUR: Khazanah Nasional Bhd is considering selling as much as US$1bil (RM3.26bil) of dollar-denominated exchangeable Islamic bonds, say four people with knowledge of the deal.
The state-owned entity, which was the first in the syariah-compliant industry to sell such debt in 2006 and also pioneered the issuance of yuan sukuk, was currently choosing banks for the potential offer, said the people who asked not to be identified because the details are private. The notes would be exchangeable into shares of companies controlled by Khazanah, they said.
Under a government directive, the fund has been reducing its stakes in Malaysian corporations via Islamic debt offerings that can be converted into shares. The latest sale from Khazanah, which owns about 32% of Tenaga Nasional Bhd, the country’s biggest power producer, and about 29% of Telekom Malaysia Bhd, will be its sixth.
“Khazanah’s sukuk is part of a gradual move to make the Malaysian stock market more liquid,” Gerald Ambrose, who oversees the equivalent of US$2.6bil as managing director of Aberdeen Asset Management Sdn said in a telephone interview. “Demand for this exchangeable sukuk should be well-received.”
Asuki Abas, a spokesman for Khazanah, couldn’t be immediately reached for comment via mobile phone or e-mail.
The fund last raised S$600mil from five-year exchangeable Islamic debt in October that can be converted into shares of IHH Healthcare Bhd.
A decision hadn’t yet been made on which equities would be included in this offering, the people said. Khazanah also owns 39% of telecommunications company Axiata Group Bhd, the biggest shareholder. It has about RM103.5bil of assets, including a stake in CIMB Group Holdings Bhd.
Khazanah issued the world’s first syariah-compliant notes denominated in yuan in Hong Kong in 2011 and sold S$1.5bil of five- and 10-year sukuk in Singapore in August 2010.
The 2.9% Chinese currency bonds due in October 2014 yielded 3.27% when last traded on March 12, according to Bloomberg data. The 2.615% Singapore dollar notes maturing in August 2015 are paying 1.32% today.
Issuance of Islamic bonds in Malaysia, the world’s biggest sukuk market, has more than doubled this year to RM26bil, data compiled show.