Danajamin issues RM500m tier-2 subordinated sukuk

KUALA LUMPUR: Danajamin Nasional Bhd, the country's first financial guarantee insurer, has issued its inaugural RM500 million, tier-2 subordinated sukuk, part of a RM2 billion of senior and subordinated Sukuk Murabahah.

The subordinated sukuk would have a tenure of 10 years, with a callable option made available from year five. The programme was rated AA1 by RAM Rating Services Bhd and AA+ by Malaysian Rating Corporation Bhd, Danajamin said in a statement.

The sukuk, which will be redeemed at its full nominal value upon maturity, is subordinated, unsecured obligations of the company, ranking pari passu with any other existing subordinated, unsecured obligations of the company.

“This programme provides an alternative to the company in sourcing for additional capital. It will also increase the ability of Danajamin in meeting its developmental mandate of bringing new and viable companies into the debt capital market,” said chief executive officer Mohamed Nazri Omar.

The inaugural issue was oversubscribed, receiving an overwhelming response of about RM800 million from a diverse range of investors achieving a yield of 4.80%.
 
As a result, the issuance was upsized from the initial size of RM300 million to RM500 million, of which RM400 million is offered to investors and RM100 million via private placement.

“We are indeed very pleased to receive encouraging support from a wide range of investors that include asset managers, financial institutions, pension funds and insurance companies.  

"This reflects the market confidence in Danajamin. We were able to attract a total of 16 investors to participate in this inaugural issuance,” Nazri added.

The issuance also sees Danajamin strengthening its regulatory capital level, enabling it to continue meeting its developmental mandate to stimulate the bond/sukuk market. - Bernama