KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) plans its third issuance of covered sukuk worth RM900mil, according to a regulatory filing by credit rating agency RAM Ratings Bhd.
Covered sukuk are rare in Islamic finance but work in much the same way as conventional covered bonds, where investors are entitled to claims not only on the issuer but also on assets backing the structure, giving them two layers of security.
MBSB has raised a combined RM1.2bil worth of covered sukuk in the past two years, under a RM3bil programme.
The third tranche has a tenor of 10 years and has been assigned a preliminary rating of AA1 by RAM Ratings.
The transaction uses a portfolio of personal-financing receivables, which have a weighted-average tenor of 13 years, to provide the additional security.
MBSB was part of a proposed three-way merger of Malaysian lenders, which was called off in January.
It is aiming to double its corporate loan book by 2020 and has plans to convert itself into a full-fledged Islamic lender.