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Malaysia to launch global sukuk with hospitals as asset

Country aims to become international Sharia banking hub

Mohammad Najib Abdul Razak
Image Credit: Bloomberg News
Mohammad Najib Abdul Razak
Gulf News

Kuala Lumpur:  Malaysia will offer around $1 billion (Dh3.67 billion) in a global sukuk issue to investors from today, its first international debt sale since 2002, two sources said.

They said yesterday the government was targeting about $1 billion for the bond that would be entirely sukuk and would be launched at an Islamic economic forum in Kuala Lumpur.

CIMB, HSBC and Barclays would manage the deal for the government.

All three banks declined comment.

The deal will be an ijara sukuk likely to be of a five-year maturity, said another source.

Ijara sukuk give investors ownership of a tangible asset pledged by the issuer and tied to a lease contract.

Returns come in the shape of rental streams paid on the asset.

The underlying asset in the planned issue will be government hospitals.

The issue would be targeted mainly at Middle East investors, the source said.

Investor meetings

Investor meetings would be held in Hong Kong on Thursday and in Singapore on Friday before moving to Jeddah on Saturday, Riyadh on Sunday and London and Dubai on Monday.

The series of investor meetings was expected to wind up in New York next Tuesday.

"As of now we are taking the markets each day as it comes and the issuer is in no rush for money so the launch will be subject to that," one of the sources said.

Malaysia last tapped the global bond market in 2002 when it raised $600 million through the sale of its first international sukuk.

Sukuk can have higher yields than conventional paper because of the relatively illiquid secondary Islamic bond market but a global sukuk offering would help reinforce Malaysia's ambitions to become an international Sharia banking hub.

Malaysian Prime Minister Najib Razak had said in April Malaysia would likely tap global bond markets by offering a US dollar Islamic bond to test investor appetite for its assets.

The government sold Dh102 billion worth of bonds last year.

  • $600m: The amount Malaysia raised in 2009 sukuk
  • $1b:  Target figure for 2010 Islamic bond issue