KUALA LUMPUR: Khazanah Nasional Bhd has priced a 5-year US$750mil (RM3.15bil) US dollar-denominated straight sukuk to refinance Penerbangan Malaysia Bhd guaranteed notes at a significantly lower cost.
The USD sukuk will be issued via a Malaysian-incorporated special purpose vehicle Danga Capital Bhd. This will be Khazanah’s first USD straight sukuk issuance and Danga’s third foreign currency issuance under its Multicurrency Islamic Securities Programme.
The USD sukuk was priced at a profit rate of 3.035% following an accelerated bookbuilding process which attracted demand of 1.5x booksize from financial institutions, asset management companies, statutory bodies and insurance companies.
“Despite challenging market conditions, Khazanah achieved its target issue size at a spread of 178 basis points above prevailing 5-year US Treasuries. Proceeds of the USD Sukuk will be utilised to refinance Penerbangan Malaysia Bhd’s US$1bil guaranteed notes maturing this year,” it said in a statement on Wednesday.
Khazanah said it was able to refinance these notes, which are guaranteed by the Government of Malaysia at a savings of 2.59% per annum against the current 5.625% coupon while simultaneously reducing the Malaysian Government’s contingent liability.
The USD Sukuk is structured under the Shariah principle of Wakalah1 utilising Syariah-compliant shares and Syariah-compliant commodities. It will be listed on Bursa Malaysia Securities Bhd (under an Exempt Regime), Labuan International Financial Exchange Inc (LFX) and the Singapore Exchange Securities Trading Limited (SGX-ST).
“The USD sukuk issuance demonstrates Khazanah’s ability to access the debt capital markets and achieve a competitive spread against a backdrop of market volatility. This issuance is another milestone for Khazanah, which has consistently closed innovative and landmark transactions,” said Khazanah Chief Financial Officer Datul Mohd Izani Ghani.
CIMB and DBS Bank Ltd are the Joint Global Coordinators while CIMB, DBS Bank Ltd. and Standard Chartered Bank are Joint Bookrunner for this USD Sukuk offering. CIMB Islamic acted as the sole Syariah Adviser for the transaction.
(The Star Online / 24 February 2016)
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