Malaysia remains leader in Islamic finance market

The sukuk issuance has also enabled the country to strengthen its position as a top investment destination, the ministry said in its Economic Report 2016/17 released in conjunction with the announcement of the 2017 Budget by Prime Minister Datuk Seri Najib Tun Razak today.

"The overwhelming response to the 2016 government's global sukuk issuance reflects global investors' continued confidence in the country's economic fundamentals," according to the report.

In April, the government issued a US$1.5 billion sukuk to redeem the existing US$1.2 billion sukuk due in July 2016 as well as to finance development expenditures.

The sukuk, which was issued in two tranches namely 10-year and 30-year, was structured under the Shariah principle of Wakalah.

It represented a major breakthrough in sovereign sukuk in terms of structure, and was competitively priced despite uncertainties in the global economy.

The extensive roadshow to promote the sukuk has engaged more than 130 investors across global financial centres, including Malaysia, Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York.

The roadshow received overwhelming response from global investors, attracting an aggregate order exceeding US$6.3 billion from a combined investor base of over 195 accounts, representing a subscription rate of 4.2 times over the offering size.

Many of the investors placed orders in large ticket sizes of above US$1O million, which in aggregate made up more than 75 per cent of the final order book.

"Following the resounding support from investors, the 10-year tranche was priced at 3.179 per cent, while the 30-year tranche was priced at 4.080 per cent.

"This represents a zero to minimal new issue premium against the government's secondary yield curves and is lower than the typical new issue premium paid by sovereigns globally," the report said. -- BERNAMA