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Wednesday March 14, 2012

EPF to boost sukuk holdings

Kuala Lumpur: The Employees Provident Fund (EPF) plans to increase holdings of global Islamic bonds to US$3bil by 2013 from US$1.7bil, chief executive officer Azlan Zainol said.

Syariah-compliant notes accounted for 1.5% of EPF’s total bond allocation and the plan was to increase it to 2.5% by 2013, Azlan said in an interview. The company started a programme to buy sukuk in October 2010.

“I’d like to go into more Islamic bonds,” said Azlan, who manages the RM470bil fund. “We want to contribute towards making Malaysia the Islamic financial hub.”

Malaysia pioneered syariah-compliant finance more than 30 years ago and is the world’s biggest market for sukuk.

Global sales of the debt totalled US$8.2bil this year, compared with US$4.5bil a year earlier, according to data compiled by Bloomberg. Offerings reached a record US$36.3bil last year.

EPF planned to broaden its mandate to include overseas non-Islamic securities in the second quarter because of a supply shortage of syariah-compliant debt, Azlan said. The pension fund was seeking to meet its target of investing 5% of funds in foreign-currency bonds, he added.

The company held RM124.6bil, or 27% of its assets, in Malaysian government bonds including syariah-compliant notes at the end of December, making it the single largest owner in the country, according to its website. It also had RM160.7bil in loans and corporate debt, RM167.2bil in stocks, RM14.9bil in money-market bills and RM1.8bil in property.

The EPF was the second largest sovereign pension fund in Asia outside Japan at the end of 2010, according to rankings by consultant company Towers Watson & Co in Hong Kong. Only South Korea’s National Pension Service had more assets. — Bloomberg

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