M’sia’s US$1.5b Islamic bonds oversubscribed, almost seven times

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KUALA LUMPUR: Global investors oversubscribed the Malaysian government’s US$1.5 billion (RM5.48 billion) Islamic bonds, according to the Finance Ministry.

In a statement yesterday, Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said the US$1 billion 10-year sukuk saw an over subscription of almost seven times, while the US$500 million 30-year portion was oversubscribed by some six times.

“We are delighted to bring this groundbreaking sukuk to the growing Islamic finance market. We are extremely pleased with the success of this deal and the confidence of the global investors in the Malaysian credit story,” Mohd Irwan said.

He said the bonds were “priced at the tighter end of the revised price guidance”, reflecting investors’ confidence in the country’s strong external position, monetary flexibility, fiscal sustainability, and the economy’s diversity and competitiveness.

He said the US$1 billion 3.043% trust certificates will mature in 2025 while the US$500 million 4.236% sukuk is valid till 2045. The sukuk pricing followed a global roadshow in Kuala Lumpur, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.

According to him, the bonds, issued via Malaysia Sovereign Sukuk Bhd, attracted an aggregate interest of over US$9 billion from a combined investor base of over 450 accounts.

“The sukuk issued via a special purpose entity, Malaysia Sovereign Sukuk, employs a structure utilising syariah-compliant commodities, leasable assets and non-physical income-generating assets [in the form of rights to participate in the provision of services], a world first for a sovereign sukuk.

“Proceeds from this offering will be used by the Malaysian government for syariah-compliant general purposes, specifically for the redemption of 1Malaysia Sukuk Global Bhd’s US$1.25 billion trust certificates due in June 2015 as well as to finance development expenditures,” Mohd Irwan said.

According to him, the bonds were expected to be rated A- by Standard and Poor’s Ratings Services and A3 by Moody’s Investors Services Ltd.

CIMB Investment Bank Bhd, The Hongkong and Shanghai Banking Corp Ltd and Standard Chartered Bank are joint book runners and joint lead managers for the exercise.

 

This article first appeared in The Edge Financial Daily, on April 17, 2015.