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Friday December 14, 2012

UEM Land selling RM600m sukuk?

It seeks to price 5-year bonds to yield 4.25%-4.4%

KUALA LUMPUR: UEM Land Bhd, Malaysia's biggest property company by market value, started marketing RM600mil sukuk, its first issuance of syariah-compliant Islamic bonds, two people familiar with the sale said.

The company was seeking to price the five-year sukuk to yield 4.25% to 4.4%, said the people who asked not to be named as the information is private. That's as much as 114 basis points above similar-maturity non-Islamic government debt, according to Bank Negara Malaysia index.

The issuance is its first under a RM2bil bond programme disclosed by Malaysian Rating Corp on Dec 3. UEM Land, which was helping develop Iskandar Malaysia, would use the proceeds for syariah-compliant corporate purposes, the company said in an e-mailed to Bloomberg News on Dec 6, without elaborating.

“Demand for the UEM Land sukuk will be robust as it offers investors an opportunity to diversify their portfolio,” Fariza Taib, who manages RM1bil at Asian Islamic Investment Management Bhd, said in an interview yesterday.

“The sukuk also offer potential yield pick-up. I'm also comfortable with the name and tenor,” she said.

UEM Land has a market capitalisation of RM9.3bil and is 65% controlled by Khazanah Nasional Bhd. The developer's bonds have been preliminarily assigned AA- at Malaysian Rating, its fourth-highest investment grade.

Nik Surina Suria Nik Abdullah, UEM Land's corporate communications head, couldn't be immediately reached for comment by phone yesterday.

Borrowing costs on global Islamic notes dropped 115 basis points, or 1.15 percentage point, this year to 2.84% on Wednesday after reaching a record 2.76% on Nov 30, the HSBC/Nasdaq Dubai US Dollar Sukuk index shows. - Bloomberg

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