More Foreign Issuers Flock to Originate Sukuk in Ringgit Market (By MIFC)

The attraction of Malaysia as a sukuk origination domicile continues unabated with three more foreign institutions raising or about to raise funds in the ringgit market.

Bahrain-based Gulf International Bank (GIB) launched its debut RM3.5 billion (USD1.11 billion) Sukuk Al-Wakalah medium-term note (MTN) programme at the end of May in Malaysia.

The Programme, which was jointly lead managed by CIMB Investment Bank Berhad and Standard Chartered Saadiq Berhad, was rated AA1 by the Malaysian rating agency, RAM Ratings. In its rating rationale, RAM Ratings declared that GIB's MTN Programme ratings "are underpinned by the strong financial support from its ultimate major shareholder - the government of Saudi Arabia - which indirectly owns 97 per cent of the bank. The ratings also give credence to the bank's entrenched wholesale-banking franchise within the Gulf Cooperation Council region, robust capitalisation levels and healthy liquidity position."

In a statement, GIB Chairman Jammaz bin Abdullah Al-Suhaimi emphasised that "the sukuk programme represents a strategic move to tap into the ringgit market to diversify funding avenues and currencies for the bank."

GIB was encouraged by the investors' interest in its Programme following a recent roadshow to Malaysia. "We are pleased with the interest shown by these investors and expect an issuance of sukuk in the near future when the market conditions are convenient. We will continue to monitor the market in the future to access funding opportunities, and this sukuk programme will allow the bank to further diversify its funding base and improve the maturity profile of its liabilities," stated Dr Yahya A Alyahya, GIB Chief Executive Officer.

Another GCC originator, Kuwait-based Gulf Investment Corporation (GIC) has mandated AmInvestment Bank as lead manager for its two-tranche RM325m (USD103.2m) sukuk - comprising a 10-year RM170m (USD54m) issuance and a 15-year RM155m (USD 49.2m) issuance.

GIC also appointed AmIslamic Bank as the transaction agent to facilitate commodity trading on the Bursa Suq Al Sila commodity Murabahah trading platform on Bursa Malaysia.

This latest issuance is under GIC's existing 20-year RM3.5bil (USD1.1bil) Sukuk Wakala bi Istithmar medium term notes.

The 20-year programme, according to GIC, will provide the Corporation greater flexibility to issue sukuk of varying tenures of up to 10 years on a 'need to' basis from time to time to fund its general working capital requirements.

Another foreign issuer which is finalising its debut sukuk in the Malaysian market is the Development Bank of Kazakhstan (DBK), which are 100 per cent owned by the Government of Kazakhstan.

DBK is working with HSBC and Royal Bank of Scotland (RBS) to manage the ringgit-denominated issuance which will be part of a proposed RM1.5 billion Islamic Medium Term Notes (MTN) Programme and which is effectively a quasi-sovereign offering.

The Development Bank of Kazakhstan (DBK) has already received approval from the Kazakhstan and Malaysian regulatory authorities.

The Malaysian rating agency, RAM Rating Services Berhad has assigned an 'AA2' rating to the proposed DBK RM1.5 billion Sukuk Programme.