Malaysia: Overwhelming response to sukuk

KUALA LUMPUR: Malaysia has strengthened its position as a top investment destination with the overwhelming response to the government’s newly-priced global sukuk issuance, which reflects global investors’ continued confidence in the country.

Investors from a combined base of more than 195 accounts subscribed for the government’s 10-year and 30-year benchmark global trust certificates (wakala global sukuk), attracting an aggregate interest of more than US$6.3 billion (RM24.5 billion) and representing an oversubscription of 4.2 times.

Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said Malaysia remained among the faster-growing economies in the region and continued to successfully pursue fiscal consolidation while maintaining monetary and financial stability.

“This is a remarkable achievement as demonstrated by the tight pricing and excellent response to this landmark sukuk,” he said in a statement yesterday.

The government, via special purpose entity Malaysia Sukuk Global Bhd, has successfully priced the 10-year and 30-year benchmark sukuk papers at 3.18 and 4.08 per cent, respectively.

The new sukuk format uses non-physical assets to underpin an agency-based transaction known as wakala, instead of the traditional use of physical assets (commodity murabaha). 

The sukuk used vouchers representing entitlement to travel units and syariah-compliant shares, the statement said.

This could serve as a model for other sovereigns which have previously faced some difficulty in identifying and transferring tangible assets, such as buildings, for use in sukuk issuance.

The wakala sukuk are expected to be assigned ratings of “A-” by Fitch Ratings and Standard and Poor’s Ratings Services, and “A3” by Moody’s Investors Services.

The issuance is Malaysia’s fifth global sukuk, after previous issuances in 2002, 2010, 2011 and 2015.

It was priced after a roadshow across global financial centres, including Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York, besides Kuala Lumpur.

CIMB, HSBC, J.P. Morgan and Maybank acted as the bookrunners and lead managers for the offering.

SOURCE: New Straits Times Online / 22 April 2016

Malaysia: Overwhelming response to sukuk

KUALA LUMPUR: Malaysia has strengthened its position as a top investment destination with the overwhelming response to the government’s newly-priced global sukuk issuance, which reflects global investors’ continued confidence in the country.

Investors from a combined base of more than 195 accounts subscribed for the government’s 10-year and 30-year benchmark global trust certificates (wakala global sukuk), attracting an aggregate interest of more than US$6.3 billion (RM24.5 billion) and representing an oversubscription of 4.2 times.

Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said Malaysia remained among the faster-growing economies in the region and continued to successfully pursue fiscal consolidation while maintaining monetary and financial stability.

“This is a remarkable achievement as demonstrated by the tight pricing and excellent response to this landmark sukuk,” he said in a statement yesterday.

The government, via special purpose entity Malaysia Sukuk Global Bhd, has successfully priced the 10-year and 30-year benchmark sukuk papers at 3.18 and 4.08 per cent, respectively.

The new sukuk format uses non-physical assets to underpin an agency-based transaction known as wakala, instead of the traditional use of physical assets (commodity murabaha). 

The sukuk used vouchers representing entitlement to travel units and syariah-compliant shares, the statement said.

This could serve as a model for other sovereigns which have previously faced some difficulty in identifying and transferring tangible assets, such as buildings, for use in sukuk issuance.

The wakala sukuk are expected to be assigned ratings of “A-” by Fitch Ratings and Standard and Poor’s Ratings Services, and “A3” by Moody’s Investors Services.

The issuance is Malaysia’s fifth global sukuk, after previous issuances in 2002, 2010, 2011 and 2015.

It was priced after a roadshow across global financial centres, including Hong Kong, Singapore, Abu Dhabi, Dubai, London and New York, besides Kuala Lumpur.

CIMB, HSBC, J.P. Morgan and Maybank acted as the bookrunners and lead managers for the offering.

SOURCE: News Straits Times Online / 22 April 2016

Oman: New regulation on sukuk to provide transparency

Muscat: Oman’s market watchdog Capital Market Authority (CMA) on Wednesday announced its new sukuk regulation, which includes stipulation on establishing a trustee structure and an LLC company as a special purpose vehicle for issuing sukuk.

The regulation, which is effective from Wednesday, also allows structure of the sukuk subject to the approval of respective Sharia Supervisory Board issuer and the choice of the board is left to the issuer.

The regulation made rating optional for the issuer and there is no restriction on the sukuk amount to be raised based on the company’s capital, said a CMA release.

The new sukuk regulation will provide clarity and transparency to the market players, while providing protection to investors in a sukuk transaction. In addition, it has been drafted to provide flexibilities and spur innovation for the market players.

“The issuance of this new sukuk regulation forms an integral part of the overall strategy of the CMA to enable the capital market to play its vital role as a fundraising platform for companies in the economic development of Oman, particularly in the fixed-income market, where sukuk forms an important element to further develop Oman’s Islamic capital market,” said Abdullah Salim Al Salmi, executive president of the CMA.

“In addition, the new sukuk regulation will form a key milestone in the evolution of the sukuk market in Oman and hopefully spur further Sukuk issuances particularly from the private sector players in order to meet their development and funding needs, while diversifying the financing base and risk away from the traditional banking sector,” he added.

“Further, sukuk issuances will also provide an essential liquidity management instrument and investment avenue for both Islamic and conventional financial institutions, investment funds and takaful/insurance operators in Oman. Hence, not only providing a wider investor base of both conventional and Sharia-compliant investors, but also attracting the required foreign investments into the country via the foreign investors. We are confident that this new regulation will have a positive impact on Oman’s capital market and the economy.”

The sukuk regulation is being issued subsequent to the amendments made to the Capital Market Law under Royal Decree No. 59/2014 on December 10, 2014, which provides the CMA the authority to regulate all sukuk issuances in Oman and any Special Purpose Vehicle or Company (SPV) being incorporated for the issuance of a sukuk, including the tax and fee exemption status provided for the SPV.

This sukuk regulation would complement the existing bond regulatory framework, which are currently in place in the Commercial Companies Law and Executive Regulation of the Capital Market Law.

All jurisdictions have specific and separate sukuk regulations, particularly in the Gulf Cooperation Council, with many just having a conventional bond regulatory framework with some additions made on the Sharia requirements.

In a short span of three years, besides the establishment of two Islamic banks and six Islamic windows, the Islamic financial market in Oman has seen the launch of the new Muscat Securities Market (MSM) Sharia Index with 30 Sharia-compliant listed companies on the MSM, three Sharia-compliant investment funds, the first Oman sovereign sukuk and also the first corporate sukuk, and the establishment of two takaful operators including the issuance of the new takaful law.

SOURCE: Times Of Oman / 13 April 2016