Malaysia successfully prices US$1.5 billion global sukuk - MOF

Malaysia has successfully priced US$1 billion (RM3.65 billion) of 10-year and US$500 million (RM1.8 billion) of 30-year benchmark Trust Certificates (Sukuk) for a total deal size of US$1.5 billion (RM5.4 billion).

The Ministry of Finance, in a statement, said, the 30-year tranche was the government's inaugural sukuk issuance which is the longest tenured sukuk ever by a sovereign.

The deal was oversubscribed, attracting an aggregate interest of over US$9 billion (RM32.8 billion) from a combined investor base of over 450 accounts, the ministry said.

The 10-year tranche was oversubscribed by almost seven times and the 30-year tranche was oversubscribed by approximately six times.

The sukuk, issued via a special purpose entity, Malaysia Sovereign Sukuk Bhd, employed a structure utilising Shariah-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.

The ministry said that the offering marked the country's fourth US dollar-denominated sovereign global sukuk issuance, following its successful global sukuk issuances in 2002, 2010 and 2011.

Proceeds from the offering would be used by Malaysia for Shariah compliant general purposes, specifically for the redemption of 1Malaysia Sukuk Global Bhd's US$1.25 billion (RM4.6 billion) Trust Certificates due in June 2015, as well as, to finance development expenditures.

"We are delighted to bring this ground-breaking 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", said Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.

The 10-year tranche was allocated to investors in the Middle East (24 per cent), Asia (50 per cent), Europe (16 per cent) and the United States (10 per cent), while the 30-year tranche was allocated to investors in the Middle-East (two per cent), Asia (50 per cent), Europe (19 per cent) and the United States (29 per cent).

The deal was priced at the tighter end of the revised price guidance reflecting investors' confidence, strong external position, monetary flexibility, fiscal sustainability, as well as, diversified and competitive Malaysian economy.

The sukuk are expected to be assigned ratings of A- by Standard and Poor's Ratings Services and A3 by Moody's Investors Services Limited.

The deal was successfully priced following a global investor road show across key financial centres, comprising Kuala Lumpur, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.

CIMB Investment Bank Bhd, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as the joint bookrunners and joint lead managers for the global Sukuk offering.