Khazanah Nasional Berhad has priced a 5-year US$750 million (approximately RM3.15 billion) US Dollar-denominated straight Sukuk.

According to a statement by Khazanah, proceeds of the USD Sukuk will be utilised to refinance Penerbangan Malaysia Berhad’s US$1.0 billion guaranteed notes maturing this year.

Capitalising on low US Treasury yields, Khazanah was able to refinance these notes which are guaranteed by the Government of Malaysia at a savings of 2.590% per annum against the current 5.625% coupon while simultaneously reducing the Malaysian Government’s contingent liability.

"This issuance is another milestone for Khazanah, which has consistently closed innovative and landmark transactions.”

Khazanah's Chief Financial Officer, Dato’ Mohd Izani Ghani

The US Dollar Sukuk will be issued via a Malaysian-incorporated special purpose vehicle Danga Capital Berhad.

The US$750 Sukuk will be Khazanah’s first USD straight sukuk issuance and Danga’s third foreign currency issuance under its Multicurrency Islamic Securities Programme.

The USD Sukuk was priced at a profit rate of 3.035% following an accelerated bookbuilding process which attracted demand of 1.5x booksize from financial institutions, asset management companies, statutory bodies and insurance companies.

Despite challenging market conditions,Khazanah achieved its target issue size at a spread of 178 basis points above prevailing 5-year US Treasuries.

“The USD Sukuk issuance demonstrates Khazanah’s ability to access the debt capital markets and achieve a competitive spread against a backdrop of market volatility."

Khazanah's Chief Financial Officer, Dato’ Mohd Izani Ghani

The USD Sukuk, which is structured under the Shariah principle of Wakalah1 utilising Shariah compliant shares and Shariah-compliant commodities, will be listed on Bursa Malaysia Securities Berhad (under an Exempt Regime), Labuan International Financial Exchange Inc. (“LFX”) and the Singapore Exchange Securities Trading Limited (“SGX-ST”).

CIMB and DBS Bank Ltd. are the Joint Global Coordinators while CIMB, DBS Bank Ltd. and Standard Chartered Bank are Joint Bookrunner for this USD Sukuk offering.

CIMB Islamic acted as the sole Shariah Adviser for the transaction.