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Friday, 17 April 2015

Malaysia successfully prices US$1.5bil global sukuk

KUALA LUMPUR: Malaysia has successfully priced US$1 billion of 10-year and US$500 million of 30-year benchmark Trust Certificates  (Sukuk) for a total deal size of US$1.5 billion.
The Ministry of Finance, in a statement, said, the 30-year tranche was the governments inaugural sukuk issuance which is the longest tenured sukuk ever by a sovereign. 
The deal was oversubscribed, attracting an aggregate interest of over US$9 billion from a combined investor base of over 450 accounts, it said.
The 10-year tranche was oversubscribed by almost seven times and the 30-year tranche was oversubscribed by approximately six times.
The sukuk, issued via a special purpose entity, Malaysia Sovereign Sukuk Bhd, employed a structure utilising Shariah-compliant commodities, leasable assets and non-physical income-generating assets (in the form of rights to participate in the provision of services), a world first for a sovereign sukuk. 
The ministry added that the offering marked the country's fourth US dollar-denominated sovereign global sukuk issuance, following its successful global sukuk issuances in 2002, 2010 and 2011.
Proceeds from the offering would be used by Malaysia for Shariah compliant general purposes, specifically for the redemption of 1Malaysia Sukuk Global Bhds US$1.25 billion Trust Certificates due in June 2015, as well as, to finance development expenditures.
"We are delighted to bring this ground-breaking Sukuk to the growing Islamic finance market. We are extremely pleased with the success of this deal and the confidence of the global investors in the Malaysian credit story", said  Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.
The 10-year tranche was allocated to investors in the Middle-East (24 per cent), Asia (50 per cent), Europe (16 per cent) and the United States (10 per cent), while the 30-year tranche was allocated to investors in the Middle-East (2 per cent), Asia (50 per cent), Europe (19 per cent) and the United States (29 per cent).
The deal was priced at the tighter end of the revised price guidance reflecting investors confidence, strong external position, monetary flexibility, fiscal sustainability, as well as, diversified and competitive Malaysian economy.
The sukuk are expected to be assigned ratings of A- by Standard and Poors Ratings Services and A3 by Moodys Investors Services Limited.

The deal was successfully priced following a global investor road show across key financial centres, comprising Kuala Lumpur, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.
CIMB Investment Bank Bhd, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as the joint bookrunners and joint lead managers for the global Sukuk offering.

(The Star Online / 16 April 2015)
Alfalah Consulting - Kuala Lumpur:
Islamic Investment Malaysia:

Malaysia exports Islamic Finance Expertise to Drive Russian Islamic Finance Ambitions

A rising domestic Muslim population estimated at 17 million, as well as ambitions to tap alternative sources of investment and funding is driving a Russian push to develop its expertise in Islamic finance.
Recent developments include a draft law supported by Russian banks who lobbied the central bank on allowing Islamic finance institutions to enter the Russian market, as well as a recent agreement between Russia’s National Rating and the Islamic International Rating Agency to jointly rate sharia-compliant products.
To provide a further push Russia is looking to Malaysia to assist and build its knowledge and human capital within the sector. In February a delegation from Malaysia, consisting of representatives of the state corporation MATRADE, a subdivision of the Central Bank of Malaysia for development of Islamic finance IBFIM and one of the leading universities University Tun Adbul Razak visited Russia. The legal and economic environment in Russia was assessed, with a view for the development of a feasibility study for opening Islamic windows and launching Islamic banking products in the Russian Federation.

Kazan Federal University and University Tun Adbul Razak Sign Agreement

A more recent development has seen one of the oldest universities in Russia, the Kazan Federal University, located in Kazan, Tatarstan this week sign a Memorandum of Understanding with University Tun Adbul Razak to develop cooperation in the field of Islamic banking law.
A delegation from Malaysia visited several Kazan Federal University units including the Institute of Management, Economics and Finance, and the Faculty of Law.

Malaysia Exports Islamic Finance Expertise

Malaysia has developed considerable expertise in Islamic finance being a pioneer in modern Islamic Banking boasting the world’s biggest sukuk market. It is looking to export its Islamic finance expertise and its banks have successfully assisted in Singapore and the Hong Kong government to issue sukuk.
A planned 2011 sukuk issuance by the Tatarstan Republic was postponed due to “technical difficulties” Bloomberg reported in 2014, and Vnesheconombank, Russia’s state development bank, is seeking advice from lenders in the Middle East on how to sell its first Islamic bonds, the RIA Novosti state-news service reported Dec. 16.
Malaysia was instrumental in the first sovereign Sukuk in the Russian Commonwealth with the issuance in 2012 of the Development Bank of Kazakhstan sukuk for 240 Million Malaysian Ringgit, which was issued in Malaysia.

(Islamic Finance.Com / 16 April 2015)
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Islamic Investment Malaysia:

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