MBSB to issue world’s first covered Sukuk Murabahah worth US$931.26 million - IFN

MBSB to issue world’s first covered Sukuk Murabahah worth US$931.26 million

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MALAYSIA: Malaysia Building Society (MBSB) is set to debut a 15-year covered Sukuk Murabahah next month. Said to be the first of its kind, the covered Sukuk Murabahah will be issued at RM3 billion (US$931.26 million) with a dual recourse structure, backed by financing receivables. The unique feature of the Sukuk program offers investors recourse to a pool of financing receivables as well as to the issuer itself. According to Ahmad Zaini Othman, the president and CEO of MBSB, the Sukuk will be issued directly from the balance sheet of the company which will assist in strengthening the balance sheet position and strategically support the growth of MBSB’s financing assets. “The proceeds from the exercise shall be used to increase and boost MBSB’s presence in the corporate segment especially for the provision of project financing and the financing of government’s private finance initiative (PFI) projects and other projects,” says Ahmad. To date, MBSB has secured the financing of several PFI projects worth over RM5.6 billion (US$1.73 billion). He also pointed out that the program will assist to strengthen MBSB’s liquidity position and provide access to competitive fund pricing. As an ancillary consequence, the issuance further enables the company to actively contribute to Malaysia’s Islamic debt capital market, offering access to a wider pool of sophisticated investors. The first tranche of the Sukuk program is said to be issued at RM495 million (US$153.65 million) by the company’s subsidiary, Jana Kapital. The facility has been assigned a preliminary rating of ‘AA1’ by RAM Ratings, with a stable outlook. RHB Investment Bank has been appointed as the sole principal adviser, lead arranger and lead manager for the Sukuk program. MBSB is an exempt finance company which undertakes a financing business in the absence of a banking license. For the period ended 30th September, the group announced a pre-tax profit of RM680.93 million (US$211.37 million), recording a 66% increase from the previous year. The accretion was attributed to a higher income from Islamic banking operations through its personal financing business and higher net interest income from its conventional business.