RAM Ratings rates first Basel-III compliant Sukuk in Malaysia by AmIslamic

Published on 12 February 2014

RAM Ratings has assigned a preliminary AA3/Stable rating to AmIslamic Bank Berhad’s (the Bank) proposed RM3 billion Subordinated Sukuk Murabahah Programme (the Proposed Sukuk Programme), which is Basel–III compliant. At the same time, we have reaffirmed AmIslamic’s financial institution ratings at AA2/Stable/P1, along with the ratings of the Bank’s outstanding sukuk.

The financial institution ratings of AmIslamic reflect its strategic importance as the AMMB Holdings Berhad’s (rated AA3/Stable/P1) Islamic banking arm and the Bank’s highly integrated operations with its sister bank, AmBank (M) Berhad (AmBank, rated AA2/Stable/P1) under a universal-banking platform. AmIslamic leverages on AmBank’s risk-management systems, infrastructure, extensive branch network and channels.

“This is the first RAM-rated Basel III-compliant sukuk in Malaysia,” says Wong Yin Ching, RAM’s Co-Head of Financial Institution Ratings. “With Basel III regulation on capital components coming into effect early last year, we expect more issuances of Basel III-compliant sukuk in the Malaysian debt capital market,” she adds.

The sukuk to be issued under the Proposed Sukuk Programme are Basel III-compliant and qualifies as Tier 2 regulatory capital. The sukuk to be issued under the Proposed Sukuk Programme are rated 1 notch below AmIslamic’s long-term financial institution rating, underlining their lower ranking in the priority of claims upon bankruptcy or liquidation, relative to senior unsecured creditors.

Instrument	Ratings
AmIslamic Bank Berhad
Proposed RM3 billion Subordinated Sukuk Murabahah Programme	AA3/Stable
RM2 billion Subordinated Sukuk Musharakah Programme (2011/2026)	AA3/Stable
RM3 billion Senior Sukuk Musharakah Programme (2010/2040)	AA2/Stable

Media contact
Cheryl Yong
(603) 7628 1072
cheryl@ram.com.my