CIMB Islamic to raise RM5 billion with Basel III, Tier 2 sukuk programme

CIMB Islamic, the shariah-compliant unit of Malaysia's second largest bank, is preparing an Islamic bond programme to raise up to RM5 billion ($1.58 billion), according to ratings agency MARC.

The Basel III compliant sukuk programme, assigned a preliminary rating of AA+ by MARC, will go towards replacing an existing RM2 billion Tier-2 sukuk and to fund working capital, the agency said on Monday.

The securities commission is still finalising approval and CIMB is not expected to issue sukuk from the programme any time soon, an official with MARC said. The company did not specify the range of maturities or sizes for sukuk under the programme.

CIMB is currently in talks with two smaller banks to create a mega-Islamic bank. The deal would make CIMB the country's biggest bank by assets, ahead of Malayan Banking Bhd (Maybank).

Maybank last week said it won regulatory approval to raise RM10 billion by issuing capital securities, with funds going towards working capital, general corporate purposes and the refinancing of existing debt. – Reuters, August 26, 2014.

(The Malaysian Insider / 26 August 2014)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia-based Islamic finance body IILM lengthens Sukuk tenors

DUBAI: The Malaysia-based International Islamic Liquidity Management Corp (IILM) lengthened maturities in its Islamic bond programme on Monday by auctioning $400 million of six-month sukuk, its first sale of that tenor.

The IILM, a consortium of central banks from Asia, the Middle East and Africa, began the programme last year to address a shortage of instruments Islamic banks can use to manage short-term liquidity. Previously, it had only issued three-month paper.

The IILM sold the six-month sukuk at a profit rate of 0.729 percent, attracting $652 million of bids, the Malaysian central bank's website showed. It also sold $390 million of three-month sukuk at 0.525 percent, attracting $523 million of bids.

The issues were bought by primary dealers at nine banks across the Islamic world, increasing IILM's outstanding sukuk to $1.65 billion from $1.35 billion, the group said in a statement.

It has said it may eventually expand issuance to $2 billion or more; the programme permits maturities of up to one year.

(The Star Online / 26 August 2014)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com