MAHB prices RM1b sukuk at annual rate of 5.75%

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KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) announced yesterday that it had priced its inaugural RM1 billion perpetual non-call 10-year 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 Musyarakah, with a distribution rate of 5.75%.

MAHB 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 managing director Datuk Badlisham Ghazali said in a statement yesterday.

This is also the first rated perpetual sukuk in Malaysia and RAM Rating Services Bhd 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, representing a strong bid-to-cover ratio of 5.5 times.

It said the offering had been well received by government agencies, financial institutions, asset management companies, insurance companies and corporate accounts. According to a Bloomberg report yesterday, one of the attracted parties was Kumpulan Wang Persaraan (Diperbadankan) or KWAP.

According to Badlisham, the sukuk’s reception is a testimony of the confidence investors have in MAHB’s credit, operations and business activities.

MAHB intends to use the proceeds from the sukuk issuance for working capital requirements, general investments and/or to refinance any existing borrowings/financing of the group, which are syariah-compliant.

CIMB Investment Bank Bhd, Citibank Bhd, Maybank Investment Bank Bhd and HSBC Amanah Malaysia Bhd were the joint lead managers and book runners for the issuance.

This article first appeared in The Edge Financial Daily, on December 5, 2014.