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Friday, 22 April 2016

Malaysia says US$1.5bil sukuk oversubscribed

KUALA LUMPUR: Malaysia said on Thursday that it had successfully priced US$1.5bil worth of Islamic bonds, or sukuk, which was oversubscribed by 4.2 times with the bulk of the take-up from Asian accounts.
The sukuk was split between a US$1bil 10-year tranche and a US$500mil 30-year tranche at a rate of 3.179 percent and 4.080 percent respectively, the ministry of finance said in a statement.
The deal attracted orders of over US$6.3bil from a combined investor base of over 195 accounts, the statement said. Asian accounts took two-thirds of the 10-year tranche and over half of the 30-year tranche.
This compares with a similar-sized deal in April of last year which attracted a US$9bil order book from 450 accounts.

It is the fifth global sukuk by Malaysia, with previous issuances in 2002, 2010, 2011 and 2015.

STRUCTURE

The sovereign tested a new sukuk format as well, using non-physical assets to underpin an agency-based transaction known as wakala, instead of the traditional use of physical assets.

The sukuk used vouchers representing entitlement to travel units and sharia-compliant shares, the statement said, without providing further details on those assets.

This could serve as a model for other sovereigns which have previously faced some difficulty in identifying and transferring tangible assets, such as buildings, for use in sukuk.

The deal was priced after a roadshow across global financial centres, including Kuala Lumpur, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.

CIMB, HSBC, J.P. Morgan and Maybank acted as the joint bookrunners and joint lead managers for the offering.



(The Star Online / 21 April 2016)
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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

Islamic finance assets estimated at $2.1T in 2015: S&P

Sukuk issues volumes will reach $50 billion to $55 billion in 2016, according to Standard & Poor's estimates.
"We estimate Islamic finance assets were worth about $2.1 trillion at year-end 2015, compared with more than $7 trillion of cumulative GDP of the economies of the OIC countries at the same date," the ratings agency said in a report on Monday.
It said that Islamic finance could contribute to meeting some of the sustainable development goals adopted by the UN General Assembly under its 2030 agenda.
Agreed on in September 2015, the UN General Assembly set 17 sustainable development goals, or SDGs, and 169 measurable targets centred on five pillars: people, planet, prosperity, peace and partnership. The UN has stressed that striving for sustainable development will require a revitalised global partnership between all stakeholders.
"Islamic finance could play a role - a modest one at least - in meeting some of the SDGs, particularly those that are in line with the core principles of Islamic finance," said Mohamed Damak, Standard & Poor's global head of islamic finance.
Some sukuk issues by global multilateral lending institutions over the past few years illustrate this point, although their overall amount remains small compared with multilateral lending institutions' (MLIs) conventional debt issuance. "Still, Islamic finance will likely remain a moderate contributor due to the industry's small size and the issues it has yet to resolve to unlock its global potential," added Damak.

Assuming the industry continues its efforts to improve standardisation and reduce the usual timeframe for issuing sukuk, Islamic finance could attract new issuers such as MLIs or governments that might see the industry as a way to diversify their investors' base and fund their SDG agendas.

(Albawaba Business / 20 April 2016)
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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

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