PETALING JAYA: In a move to manage its debts, Sime Darby Bhd has issued RM2.2bil in Islamic debt papers at a final yield of 5.65%, which is about 179 basis points above similar-tenure Malaysian Government Securities.
The plantation heavyweight has issued a sukuk wakalah offering with a 10-year perpetual non-call tenure, which it said has been oversubscribed by 1.8 times.
This is the first call of an RM3bil programme that has been assigned a rating of AAIS by Malaysian Rating Corp Bhd (MARC).
Sime Darby said that MARC has accorded 50% equity credit on the issuance, which fits well with the group’s deleveraging initiatives.
It told the exchange that the fund-raising exercise was to manage its gearing level.
Sime Darby said the issuance has received strong order book via a limited book-build, allowing the company to upsize and price the offering at the final yield of 5.65% per annum.
Proceeds raised from issuance under the sukuk programme will go towards refinancing the group’s debt obligations and working capital requirements, it said.
The sukuk is the largest perpetual sukuk issuance globally by a non-bank, the largest ringgit perpetual sukuk issuance so far, and the first perpetual sukuk globally based on the syariah principle of wakalah.
Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh said the perpetual sukuk “is part of our deleveraging efforts”.
“We are encouraged by the strong support shown by investors and this also indicates the market’s continued confidence in Sime Darby,” he said in a statement.
Maybank Investment Bank Bhd (Maybank IB), which is the principal adviser, lead arranger and lead manager for the sukuk programme, said its participation in the transaction was holistic, whereby it delivered complete and end-to-end solutions.
“It is our privilege to work with Sime Darby again and jointly introduce the innovative sukuk wakalah to the market.
“The innovative sukuk structure, the first of its kind for an issuance of this nature, will further enhance Malaysia’s position as a global Islamic financial hub, and is a testament to our leadership in the global sukuk space,” said Maybank Kim Eng Group and Maybank IB CEO John Chong in a separate statement. Sime Darby had been under pressure to reduce its gearing following the acquisition of New Britain Palm Oil Ltd for RM6bil in March 2015.
In August last year, StarBiz reported that Sime Darby was looking at a RM6bil rights issue.
However, the proposal reportedly did not have the blessings of Sime Darby’s controlling shareholder, Permodalan Nasional Bhd.
Earlier this month, Moody’s Investors Service downgraded Sime Darby’s issuer rating and debt rating on sukuk issued by the company’s unit Sime Darby Global Bhd to Baa1from A3 with a “negative” outlook on the ratings.
It had also downgraded the senior unsecured medium-term note programme rating of Sime Darby Global Bhd to (P)Baa1 from (P)A3.
It said the downgrade reflected the extended period of weakness in the company’s financial profile after delayed plans to reduce its debt, and deteriorating cash generation across its key business segments.
Last month, Standard & Poor’s Ratings lowered its long-term corporate credit rating on the conglomerate, downgrading it to BBB+ from A- with a negative outlook.