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Wednesday September 19, 2012

MAS issues second tranche of sukuk

PETALING JAYA: Malaysias Airlines (MAS) has issued the second tranche of the junior sukuk programme, amounting to RM500mil yesterday, following the programme of up to RM2.5bil in May this year.

In a filing with Bursa Malaysia, MAS said that the sukuk was issued at par and carries a semi-annual profit rate of 6.9% per annum up to year 10. If MAS does not exercise its option to redeem at the end of the 10th year, the periodic distribution increases by 2.5%.

The proceeds raised from this issuance would be utilised for MAS’ working capital and refinancing of existing borrowings.

The sukuk is expected to be recognised as equity capital in its entirety and will serve to shore up MAS’ capital base. The sukuk is perpetual in tenure, where MAS has a call option to redeem at the end of the 10th year and on each periodic distribution date thereafter.

MAS also has the option to redeem the sukuk if there is a change in accounting standards resulting in the sukuk no longer being recognised as equity capital.

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