SINGAPORE: Export-Import Bank of Malaysia (MEXIM) said it had priced the world's first U.S. dollar-denominated Islamic bond issue from an export-import bank, selling a $300 million, five-year sukuk that attracted US$3.2 billion of investor orders.
The government-owned bank, which supports Malaysian exports and investments abroad, priced the sukuk at 140 basis points over U.S. Treasuries, equivalent to a yield of 2.874 percent. The spread was tightened from initial guidance of 165 bps over the same benchmark, it said in a statement on Tuesday.
MEXIM's chief executive Adissadikin Ali told Reuters that the funds raised would go towards expanding the bank's Islamic loan portfolio, which it hopes to increase to 40 percent of total loans in two years from 20 percent now.
The sukuk was distributed to over 185 Islamic and conventional investors, with 19 percent going to the Middle East, 65 percent to Asia and 16 percent to Europe, MEXIM said.
The issue used a wakala format, a common Islamic structure where one party manages assets for another, with a murabaha component involving the sale of commodities.
The sukuk rose in secondary market trading on Tuesday and was quoted at a spread of 128 bps over U.S. Treasuries, according to IFR, a Thomson Reuters service.
IFR quoted bankers and portfolio managers as saying that given its high credit ratings of A- from Fitch Ratings and A3 from Moody's Investors Service, MEXIM could have aimed to price the sukuk tighter, but that the good secondary market performance was positive for southeast Asian debt in general.
MEXIM's issue came at a time when political instability in Thailand, impending elections in Indonesia and general investor suspicion of emerging markets has undermined the usual bid for assets from the region.
"It went better than we expected - reception was surprisingly good," one person involved in the transaction told IFR. BNP Paribas, CIMB, HSBC and Maybank were lead managers for the deal.
MEXIM's success could pave the way for other government policy banks in the region to issue sukuk, IFR said. Indonesia Export-Import Bank has not been to the dollar market since April 2012, when it did a straight senior unsecured bond.- Reuters