KUALA LUMPUR (May 5): Khazanah Nasional Bhd has returned to the US dollar sukuk market, and successfully priced a dual-tranche offering comprising a five-year US$400 million in nominal value sukuk due 2026, and a 10-year US$600 million in nominal value sukuk due 2031.

In a statement, the sovereign wealth fund said the sukuk will be issued via a Labuan-incorporated special purpose vehicle Dua Capital Ltd.

The sukuk, which is structured under the Shariah principle of wakalah utilising Shariah-compliant shares and commodities, will be listed on Bursa Malaysia Securities Bhd under an exempt regime and the Singapore Exchange Securities Trading Ltd.

The sukuk was launched at an initial price guidance of 125 basis points (bps) over the five-year US Treasury yield, and 150bps over the 10-year US Treasury yield, Khazanah said.

The transaction garnered strong demand across Asia, Europe and the Middle East, and the order book was at a high of approximately US$6 billion when Khazanah revised the price guidance tighter by 40bps and 30bps, before finally settling to print the sukuk at a profit rate of 1.658% and 2.780% respectively, Khazanah said.

"The overwhelming demand reflects investor confidence in Khazanah's credit and our ability to deliver the mandate as Malaysia's sovereign wealth fund. This issuance will extend our liability duration as we continue to rebalance our portfolio," said Khazanah chief financial officer Faridah Bakar Ali.

Proceeds from the issuance are earmarked for general investments, refinancing of borrowings and working capital requirements of Khazanah that are Shariah-compliant, the fund said.

CIMB, DBS Bank Ltd, JP Morgan, MUFG and OCBC Bank acted as joint lead managers and joint bookrunners, while KFH Capital and Warba Bank also acted as joint lead managers.