Strong demand as Khazanah returns to US$ Sukuk market


The sovereign wealth fund said on Wednesday it successfully priced the offering which comprised a five-year US$400mil in nominal value sukuk due 2026 and a 10-year US$600mil in nominal value sukuk due 2031.

KUALA LUMPUR: Khazanah Nasional Bhd returned to the US dollar Sukuk market where its dual-tranche offering attracted strong demand across Asia, Euope and the Middle-East.

The sovereign wealth fund said on Wednesday it successfully priced the offering which comprised a five-year US$400mil in nominal value sukuk due 2026 and a 10-year US$600mil in nominal value sukuk due 2031.

It said the Sukuk will be issued via a Labuan-incorporated special purpose vehicle Dua Capital Ltd.

In 2016, Khazanah issued its first US dollar-denominated sukuk, structured under the Shariah principle of Wakalah.

“The Sukuk was launched at an initial price guidance of 125 basis points (bps) over the five-year US Treasury yield and 150bps over the 10-year US Treasury yield.

“The transaction garnered strong demand across Asia, Europe and the Middle-East, and the order book was at a high of approximately US$6bil when Khazanah revised the price guidance tighter by 40bps and 30bps to finally print the Sukuk at a profit rate of 1.658% and 2.780% respectively, ” it said.

Khazanah said the Sukuk, each of which is structured under the Shariah principle of Wakalah utilising Shariah-compliant shares and Shariah-compliant commodities, will be listed on Bursa Malaysia Securities Berhad and the Singapore Exchange Securities Trading Ltd.

Khazanah's chief financial officer, Faridah Bakar Ali said: “The overwhelming demand reflects investor confidence in Khazanah’s credit and our ability to deliver the mandate as Malaysia’s sovereign wealth fund. This issuance will extend our liability duration as we continue to rebalance our portfolio.”

Proceeds from the issuance will be utilised for general investments, refinancing of borrowings and working capital requirements of Khazanah which are Shariah compliant.

CIMB, DBS Bank Ltd., J.P. Morgan, MUFG and OCBC Bank acted as joint lead managers and joint bookrunner, while KFH Capital and Warba Bank acted as joint lead managers.

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