KUALA LUMPUR – The government has successfully priced the world’s first sovereign US dollar sustainability sukuk via the issuance of US$800 million (RM3.2 billion) 10-year and US$500 million 30-year trust certificates, with the allocation well spread globally from Asia to the United States.
Investors’ confidence was clearly reflected in the offering being oversubscribed 6.4 times over.
Due to the overwhelming demand, the government will upsize it to US$1.3 billion from US$1.0 billion initially, the Finance Ministry (MoF) said in a statement today.
It said both tranches have been assigned a rating of A3 by Moody’s Investors Service and A- by S&P Global Ratings.
The strong demand has also resulted in the lowest ever yield and spread for a US dollar sukuk issuance by Malaysia, with the 10-year and 30-year trust certificates priced at 2.07% (T + 50 basis points) and 3.075% (T + 80 basis points), respectively.
This demonstrates the market’s confidence in Malaysia’s economic recovery and growth prospects, despite a challenging year due to the Covid-19 pandemic, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
“We are extremely pleased and honoured by the investors’ vote of confidence in our maiden sustainability sukuk issuance, which also reflects their belief in Malaysia’s strong economic fundamentals and solid prospects for growth,” he said.
He said the issuance is not only a global first on many fronts, but also a strong recognition of Malaysia’s Islamic finance industry’s innovative capabilities in structuring sukuk to help advance Malaysia’s SDG-focused policies towards achieving the Shared Prosperity Vision 2030.
Subsequent to a virtual roadshow covering Asia, the Middle East, Europe and the US, the sukuk attracted a diverse group of investors.
The allocation was well-spread globally, with 55% of the principal amount of the 10-year sukuk distributed to investors in Asia, 33% to Europe, Middle-East and Africa (EMEA), and 12% to the US, while 46% of the principal amount of the 30-year sukuk was distributed to investors in Asia, 33% to EMEA, and 21% to the US.
By investor type, the distribution of the 10-year tranche was 67% to fund managers and insurance companies, 18% to central banks and governments, 14% to banks and 1.0% to others investors, while the 30-year tranche is 83% to fund managers, 10% to banks, 4.0% to central banks and governments, and 3.0% to other investors.
Malaysia’s maiden sustainability sukuk is the world’s first US dollar sustainability sukuk issued by a sovereign, whereby proceeds will be used for eligible social and green projects aligned to the UN’s Sustainable Development Goals (SDG) agenda.
This will enable Malaysia to not only meet its commitments as a responsible nation and signatory to the Paris Agreement, but also further its efforts to advance its people’s socio-economic well-being.
It is also a testament to the government’s efforts in combating climate change, as well as accelerating the transition towards a more resilient and inclusive economy, in line with the government’s Shared Prosperity Vision 2030, said the ministry.
The sukuk is also unique as its underlying assets are sustainable assets, being vouchers representing travel entitlement on Malaysia’s Light Rail Transit, Mass Rapid Transit and KL Monorail networks.
The sustainability sukuk is issued via a special purpose vehicle, Malaysia Wakala Sukuk Bhd, and based on Malaysia’s newly established The Government of Malaysia SDG Sukuk Framework.
The framework was assessed by Sustainalytics, which has declared it as being aligned with the four core components of the Social Bond Principles 2020 (SBP), the Green Bond Principles 2018 (GBP), and the Asean Sustainability Bond Standards 2018 (Asean SUS). Both the framework and Sustainalytics’ second party opinion can be accessed here.
CIMB, HSBC, and JP Morgan acted as joint bookrunners and joint lead managers on the offering. In addition, HSBC Amanah Malaysia and JP Morgan were the joint SDG structuring agents.
The sustainability sukuk’s shariah structure has been approved by the Board Shariah Committee of CIMB Islamic Bank Bhd and HSBC Global Shariah Supervisory Committee. – Bernama, April 22, 2021
