Khazanah Nasional closes another Islamic deal in Hong Kong (By IFN)

See: http://redmoney.newsweaver.co.uk/11xjcoenq12h38rwoni3wx?email=true&a=6&p=22335245&t=20877705

GLOBAL: Malaysian sovereign wealth fund (SWF), Khazanah Nasional, has once again tapped the Islamic market for a China-related deal; issuing a US$358 million Sukuk convertible into shares of Hong Kong-listed Parkson Retail Group.

Khazanah owns around 7.8% of Parkson. Its Sukuk is exchangeable into its entire holdings in Parkson, equivalent to 220 million shares.

Speaking to Islamic Finance news, a banker involved in the transaction commented that: “The deal was smoothly executed and successfully priced at the tightest end of the guidance. It received overwhelming response from the investors; marking yet another successful foray by Khazanah into the exchangeable Sukuk market.”

Pricing for the papers, which mature in seven years, was fixed at 0% at its launch. However, the yield was offered in a range between -0.25%-0%; with a conversion premium of 25-30%.

The deal was arranged by CIMB, Deutsche Bank and JP Morgan; and saw over US$1.5 billion-worth of demand from over 100 investors. The investors reportedly include convertible bond hedge funds; while also comprising investors from Asia, who took up around half of the offering, Europe (30%) and the Middle East (20%).

The Sukuk is backed by Khazanah’s holdings in Parkson and follows a similar transaction in 2008, when the SWF raised US$550 million through a five-year Sukuk convertible into 44 million Parkson shares, equivalent to a 7.9% stake.

The equity backing the current Sukuk deal is also underlying the 2008 Sukuk; of which 55% remains outstanding.