Corporates continue to dominate the Malaysian Sukuk market - IFN

Corporates continue to dominate the Malaysian Sukuk market

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MALAYSIA: Since the beginning of the year, many Sukuk issuances that were made out of Malaysia originated from corporate entities. According to data provided by Dealogic, Malaysian Sukuk deals presently sum up to approximately US$11.6 billion in the last 12 months. Adding to this amount, telecommunications network services provider OCK Group has launched a RM150 million (US$47.04 million) Sukuk Ijarah program yesterday. Proceeds from the 20-year Sukuk program will be utilized to fund the company’s expansion plans for its telecommunications network services segment. Due to the increasing demand in rooftop telecommunication towers, the company looks to build and acquire more towers in the future. In a statement issued at the Sukuk launch, OCK Group conveyed that: “This plan will contribute to the group's increasing recurring income through our business plan to lease towers back to telecommunications operators”. Entities that have participated in the Malaysian Sukuk market are mainly quasi-government companies and corporates. The first and largest deal made in the Malaysian Sukuk market for the year 2013 thus far, is by Malakoff Corporation. On the 4th January, the independent power and water producer issued a US$1.8 billion Sukuk in a domestic market public placement. Based on data by Dealogic, local companies on average tend to issue Sukuk worth less than US$200 million. For the past 12 months, Malaysian ringgit-denominated Sukuk offering reached US$12.7 billion – only US$1.7 billion behind US dollar-denominated issuances. The most common type of structure used among these issuances is the Murabahah structure. Malaysian corporates that have issued Sukuk this year range from industries such as energy supply, infrastructure development, airline services as well as financial institutions.