Saudi Arabian conglomerate, Al Bayan Holding Group, issues first tranche of Malaysian ringgit-denominated Sukuk (By IFN)

Saudi Arabian conglomerate, Al Bayan Holding Group, issues first tranche of Malaysian ringgit-denominated Sukuk

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GLOBAL: One of Saudi Arabia’s top rated companies, Al Bayan Holding Group, which has a foothold across a multitude of sectors including real estate, media and telecommunications, and transport, has issued the first tranche of its RM1 billion (US$372.32 million) Sukuk program; worth RM200 million (US$65.4 million). The issuance, which is the first Saudi Arabian issuance in the Malaysian ringgit market, is anticipated to spur further interest amongst Saudi Arabian issuers in the Malaysian Islamic capital market. According to a Malaysia-based banker, there has been an increasing number of foreign issuers tapping into the ringgit market, including the State Bank of India from “about five years ago”, the National Bank of Abu Dhabi and the Development Bank of Kazakhstan. Speaking to Islamic Finance news, he said: “We are looking to bring new issuers in from new countries; outside of the UAE and Korea for instance. As Saudi Arabia is keen on Islamic finance, it is an opportune time to encourage Saudi issuers to look into the Malaysian market.” He added: “There is a lot of demand from Malaysia-based investors who are always seeking new credit. The issuance by Al Bayan Holding is not necessarily a huge amount, but a very good development.” However, the question of whether there will be extra costs tethered to a ringgit-denominated issuance for foreign issuers still remains, as ringgit Malaysia is not a currency which is readily available outside of Malaysia. To this tune, the banker said: “Swapping is entirely dependent on the issuer and their requirements; when and whether or not they want to, so it is hard to say if there will be any additional costs incurred.” The RM200 million (US$65.46 million) Sukuk Wakalah was issued via an SPV and is rated ‘AA3’ by RAM Ratings. Proceeds from the issuance will be used towards the group’s general corporate purposes. HSBC Amanah Malaysia, Hong Leong Islamic Bank and Kenanga Investment Bank acted as the deal’s joint lead managers, while Al Hilal Bank acted as manager in the UAE.