Bank Negara to issue RM400m Islamic bonds

  • Business
  • Friday, 10 Feb 2006

KUALA LUMPUR: Bank Negara says it will issue a series of new Islamic bonds, beginning with the RM400mil Sukuk Ijarah on Feb 16. Futures issues will be of RM100mil to RM200mil in size. 

Norzila Abdul Aziz, director of Bank Negara's investment operations and financial markets department, said at a press briefing yesterday the maiden first issue would have a one-year maturity. 

“The frequency of the (future) issues depends on the asset or on the pool at the time (of issue),” she said. 

This sukuk or Islamic bond is based on the Al-Ijarah or “sale and leaseback” concept. 

Proceeds from the issue will be used to buy Bank Negara's assets, and then leased back to the central bank. Rental payments would be made seimi-annually. 

Upon maturity of the bonds, the assets would be sold back to Bank Negara at a pre-determined price. 

Norzila said the assets would be the central bank's fixed assets, adding that the pool for the sukuk programme could be upsized to RM600mil, depending on demand for the bonds. 

“Both foreign and local investors will be interested, particularly banking institutions in the international market. But the corporate sector also has expressed interest in such bonds,” she added. 

The sukuk Ijarah is expected to serve as a benchmark for other short to medium-term Islamic bonds. 

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