KUALA LUMPUR: The government has successfully priced the world’s first sovereign US dollar sustainability sukuk, via the issuance of US$800 million 10-year trust certificates and US$500 million 30-year trust certificates, with the allocation well spread globally from Asia to the US.
Investors’ confidence was clearly reflected in the offering being oversubscribed by 6.4 times, the finance ministry said today.
Due to the overwhelming demand, it said, the government decided to “upsize” the issue to US$1.3 billion from US$1 billion initially.
It said both tranches have been assigned a rating of A3 by Moody’s Investors Service and A- by S&P Global Ratings.
The strong demand has also resulted in the lowest ever yield and spread for a US-dollar sukuk issuance by Malaysia, with the 10-year and 30-year trust certificates priced at 2.07% (T + 50 basis points) and 3.075% (T + 80 basis points), respectively.
More importantly, it said, this demonstrates the market’s confidence in Malaysia’s economic recovery and growth prospects, despite a challenging past year due to the Covid-19 pandemic.
“We are extremely pleased and honoured by the investors’ vote of confidence in our maiden sustainability sukuk issuance, which also reflects their belief in Malaysia’s strong economic fundamentals and solid prospects for growth,” finance minister Tengku Zafrul Aziz said in the statement.
He said the issuance is not only a global first on many fronts, but also a strong recognition of Malaysia’s Islamic finance industry’s innovative capabilities in structuring sukuk to help advance Malaysia’s SDG-focused policies towards achieving the Shared Prosperity Vision 2030.
Subsequent to a virtual roadshow covering Asia, the Middle East, Europe and the US, the sukuk attracted a diverse group of investors.
The allocation was well-spread globally, with 55% of the principal amount of the 10-year sukuk distributed to investors in Asia, 33% to Europe, the Middle-East and Africa (EMEA) and 12% to the US, while 46% of the principal amount of the 30-year sukuk was distributed to investors in Asia, 33% to EMEA and 21% to the US.
By investor type, the distribution of the 10-year tranche was 67% to fund managers and insurance companies, 18% to central banks and governments, 14% to banks and 1% to other investors.
For the 30-year tranche, 83% went to fund managers, 10% to banks, 4% to central banks and governments and 3% to other investors.
Malaysia’s maiden sustainability sukuk is the world’s first US dollar sustainability sukuk issued by a sovereign, whereby proceeds will be used for eligible social and green projects aligned to the United Nations’ Sustainable Development Goals (SDG) Agenda.
This will enable Malaysia to not only meet its commitments as a responsible nation and signatory to the Paris Agreement, but also further its efforts to advance its people’s socio-economic well-being.