KUALA LUMPUR (Dec 4): Malaysia Airports Holdings Bhd (MAHB) announced today that it has priced its inaugural RM1 billion Perpetual Non-call 10 years Subordinated Sukuk, at an annual rate of 5.75%.

As the name suggests, MAHB’s perpetual note has no maturity, while having a 10-year call option, and is based on the Islamic principle of Musharakah, with a distribution rate of 5.75%.

MAHB had reportedly told Reuters that it would raise RM1 billion in sukuk, as costs for the klia2 terminal had risen to RM4 billion, from RM3.1 billion, after numerous delays.

“We are extremely proud to have successfully issued the world’s first ever rated Hybrid Perpetual Sukuk, a landmark transaction which demonstrates the depth of the Malaysian Sukuk Capital market,” MAHB’s managing director Datuk Badlisham Ghazali said in a press statement today.

“It is our privilege to have introduced this innovative instrument, which we believe will further enhance Malaysia’s position as a global Islamic financial hub and solidify its position as a leader in the global Islamic capital markets,” he added.

This is also the first rated perpetual sukuk in Malaysia, and RAM Rating Services Berhad (RAM) had assigned a long-term ratings of AA2 to it, the statement read.
MAHB said the final order book was in excess of RM5 billion, which represents a strong bid-to-cover ratio of 5.5 times.

It also revealed that the offering has been well-received by government agencies, financial institutions, asset management companies, insurance companies and corporate accounts.

According to a Bloomberg report earlier today, one of the attracted parties was Kumpulan Wang Persaraan (Diperbadankan) or KWAP.

Ghazali said the sukuk's reception is a testimony of the confidence that investors have in MAHB’s credit, operations and business activities.

“The issuance will enable the industry to realise the benefits from raising capital through the issuance of hybrid instruments, as a cost efficient and non-dilutive capital raising solution that lowers the cost of capital,” he said.

Notably, perpetual bonds could be treated as equity in a company’s balance sheet, instead of liabilities (debt). Hence, the fund raising could be done without affecting creditworthiness.

Meanwhile, in MAHB’s filing to Bursa Malaysia today, showed the proceeds from the sukuk issuance will be used for working capital requirements, general investments and/or to refinance any existing borrowings/financing of the group, which are shariah-compliant.

CIMB Investment Bank Bhd, Citibank Bhd, Maybank Investment Bank Bhd and HSBC Amanah Malaysia Bhd (HSBC), are the joint lead managers and bookrunners for the issuance.

MAHB closed three sen or 0.44% lower today at RM6.80, with 2.6 million shares done, giving it a market capitalisation of RM9.34 billion.