Friday 29 Mar 2024
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KUALA LUMPUR (March 24): Sime Darby Bhd announced that it has successfully made its first issuance of RM2.2 billion sukuk wakalah under its perpetual sukuk programme of up to RM3 billion in nominal value.

It saw a strong order book via a limited book build and was over 1.8 times oversubscribed from its initial target, the plantations and property group said in a statement today.

The issuance, with a 10-year perpetual non-call tenure, is one of the group's initiatives to manage its gearing level.

This allowed Sime Darby to upsize and price the offering at the final yield of 5.65% per annum.

The group said the issuance is the largest perpetual sukuk issuance globally by a non-bank, and the largest ringgit perpetual sukuk issuance so far, besides being the first perpetual sukuk globally based on the shariah principle of wakalah.

"The perpetual sukuk is part of our deleveraging efforts and we are proud that this innovative financing instrument has established a landmark in Islamic finance," said Sime Darby president and group chief executive Tan Sri Mohd Bakke Salleh.

"We are encouraged by the strong support shown by investors and this also indicates the market's continued confidence in Sime Darby," Mohd Bakke said.

Maybank Investment Bank Bhd is the principal adviser/lead arranger/lead manager for the sukuk programme, which has been assigned a rating of AAIS by Malaysian Rating Corporation Bhd (MARC). MARC has also accorded a 50% equity credit on the issuance.

The group had announced the sukuk programme back in November 2015, with the proceeds raised from the issuance to be used to refinance its debt obligations and working capital requirements.

Last month, Mohd Bakke said the perpetual sukuk issuance, together with its plans to monetise its assets overseas, will reduce the group's gearing level to 54% by the end of the financial year ending June 30, 2016 (FY16), from 61% as at the first half of FY16.

In March, Moody's Investor Service had downgraded the issuer rating of Sime Darby and its bond ratings to Baa1 from A3, with a negative outlook, to reflect the extended period of weakness in the group's financial profile.

The ratings agency noted that the group's financial profile had been deteriorating since the completion of its heavily-debt-funded acquisition of New Britain Palm Oil Ltd for RM6 billion in March 2015.

Maybank Kim Eng Group and Maybank Investment Bank Bhd chief executive John Chong said: "It is our privilege to work with Sime Darby again and to jointly introduce the innovative sukuk wakalah to the market. The innovative sukuk structure, the first of its kind for an issuance of this nature, will further enhance Malaysia's position as a global Islamic financial hub, and is a testament to our leadership in the global sukuk space."

"We are also proud that the Maybank Group's participation in this transaction is holistic, where we delivered a complete and end-to-end solution," he added.

Sime Darby shares fell four sen or 0.5% to RM7.95 at 12.30pm, giving it a market capitalisation of RM50.3 billion.

 

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