RAK Capital’s US$500 million Sukuk offering in Malaysia demonstrates confidence of UAE issuers in Malaysia’s Islamic capital market - IFN

RAK Capital’s US$500 million Sukuk offering in Malaysia demonstrates confidence of UAE issuers in Malaysia’s Islamic capital market

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MALAYSIA: In an announcement to Bank Negara Malaysia, the government of Ras Al Khaimah will be issuing its five-year US$500 million Sukuk trust certificates in Malaysia on the 21st October 2013. The papers will be issued by RAK Capital on behalf of the Investment and Development Office of the emirate. The Ijarah-structured Sukuk carries a profit rate of 3.29% per year and a tight spread of 175bps over midswaps. They are due for maturity on the 21st October 2018. Commenting on the transaction, an industry expert conveyed to Islamic Finance news that the UAE sees Malaysia as a conducive marketplace with established key laws and regulations that are favorable to Sukuk transactions. The large Malaysian Islamic capital market possesses deep liquidity which enables issuers to obtain good prices for their certificates. He further elucidated that a steady stream of deals from international issuers are to be expected in the future. Having conducted roadshows in Singapore, the UAE, London and Kuala Lumpur, the issuance reportedly received high investor demand due to its rarity value. The papers were assigned an expected senior unsecured rating of ‘A(EXP)’ by Fitch and is said to be part of the emirate’s US$2 billion Sukuk program. According to the announcement made, the certificates have not been and will not be registered under the United States Securities Act of 1933. Al Hilal Bank, Citigroup, Mashreqbank, National Bank of Abu Dhabi and Standard Chartered are the mandated arrangers for the deal.