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NEWS UPDATES 4 August 2010

Khazanah issues S$1.5b Islamic debt

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Malaysia government investment arm Khazanah Nasional Bhd has issued the largest and longest-term sukuk, or Islamic bond, in Singapore of S$1.5 billion (RM3.5 billion).

In a statement released late last night in Kuala Lumpur, Khazanah said the sukuk, with a duration of five years and 10 years, was the largest Singapore dollar-based sukuk by a foreign issuer in the island-state and the first Singapore dollar sukuk issuance out of the Malaysia International Islamic Financial Centre (MIFC) initiative.

The sukuk, at US$1.1 billion equivalent, is also Khazanah's single largest sukuk issuance to date.

Bank Negara Malaysia governor and MIFC executive committee chairman Tan Sri Dr Zeti Akhtar Aziz said the sukuk issuance in Singapore was a further step forward for the MIFC initiative to see Malaysia evolve into a multi-currency issuance platform for sukuk.

The Khazanah Singapore dollar sukuk, issued at nominal value, was successfully priced through an accelerated bookbuilding process yesterday, and at the tightest end of the price guidance at 2.6 per cent and 3.7 per cent for the five-year and 10-year sukuk respectively.

The transaction drew a demand of 4.3 times book size, enabling Khazanah to upsize the transaction from the initial offer size of S$1 billion to S$1.5 billion.

The deal attracted a diverse group of 78 local and international investors comprising financial institutions, asset management firms, statutory bodies and insurance companies from Singapore, Malaysia, Hong Kong, Brunei and Europe.

The issue via a Malaysian-incorporated special purpose vehicle, Danga Capital Bhd, encompasses a S$600 million (RM1.4billion) five-year sukuk and a S$900 million (RM2.11billion) 10-year sukuk, which was launched on an initial offer size of S$1 billion (RM2.34 billion) with a "green shoe option" (option to upsize.

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