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Wednesday August 25, 2010

IDB to list US$3.5bil sukuk bonds in KL and London

KUALA LUMPUR: The Islamic Development Bank (IDB) will dual list US$3.5bil of its sukuk bonds in Kuala Lumpur and London by the year-end.

Of this amount, US$1.1bil has already been issued to investors. About US$1bil will be issued by year end, in tranches of five, seven and 10 years.

Finance vice president Dr Abdul Aziz Al-Hinai said one of IDB’s responsibilities was to help members of the Organisation of Islamic Conference grow and develop.

It typically finances some US$5bil to US$7bil worth of projects and deals in a year. Infrastructure projects typically take up US$3bil to US$3.5bil.

Meanwhile, IDB listed its RM1bil sukuk medium-term note (MTN) programme on Bursa Malaysia yesterday. Issued via IDB’s special purpose vehicle, Tadamun Sevices Bhd, it is the inaugural sukuk by IDB to be issued in the local currency.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz striking the gong at the listing of Islamic Development Bank’s inaugural ringgit sukuk on Bursa Malaysia. From left are Badlisyah, Abdul Aziz, Bursa Malaysia chairman Tun Mohamed Dzaiddin Abdullah and Yusli.

This RM1bil sukuk has a tenure of 10 years and is rated AAA by Standard & Poor’s. The proceeds raised from will be used for general corporate purposes relating to IDB’s business activities. To date, RM400mil of the RM1bil sukuk has been issued.

This listing brings the total of Bursa’s sukuk listings to 16 by 14 issuers, including three foreign issuers, and US$21.7bil worth of sukuk programmes.

IDB’s ringgit sukuk MTN programme is listed under the exempt regime basis and is therefore, not exchange traded.

Exempt regime means that debt securities issued under this programme will not be quoted or traded on the exchange.

“We are listing because we want more visibility and transparency. We want to create more confidence among our investors. We also want to list in a country where there is more potential of trading in sukuk bonds,” Aziz said after the listing of IDB’s sukuk programme.

Bursa chief executive officer Datuk Yusli Mohamed Yusoff said that there was a growing interest among foreign issuers to list syariah financial instruments on the Malaysian market.

“This sukuk listing by IDB augurs well for our goal to further position Malaysia as a premier Islamic investment and sukuk listing hub in tandem with the Malaysia International Islamic Financial Centre’s initiatives to push our Islamic capital market’s standing on the global map,” he said.

Meanwhile, CIMB Islamic Bank Bhd chief executive officer and executive director Badlisyah Abdul Ghani said the Islamic bond market was buzzing with activities.

“Corporates are coming out aggressively to issue bonds in the second half. These issuers come from Malaysia, Indonesia, Singapore and Dubai,” he said, adding that size-wise, global issuances this year should range from US$20bil to US$25bil.

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