13 May, 2015
Islamic bond sales in Malaysia grew last month to their highest point since December 2013, Customs Today has reported.
Issuance of sukuk in April was 24% higher than in March, at 11bn ringit (USD 3.1bn), Customs Today said, quoting data from the Bloomberg AIBIM Bursa Malaysia Corporate Sukuk Index.
Sovereign wealth fund Khazanah Nasional accounted for 2bn ringgit and DanaInfra Nasional, a state-owned company that funds subway construction, raised 3.5bn ringgit, the report said.
The Malaysian government received bids for six times the value of the USD 1.5bn dollar-denominated sukuk it offered last month.
"There’s a lot more confidence among issuers after the government’s sukuk sale last week," Mohd Effendi Abdullah, head of Islamic markets at AmInvestment Bank told Customs Today. "Discussions on financing of big infrastructure projects are currently underway."
AmInvestment Bank, Malaysia's third-biggest arranger of Islamic notes, has estimated that sukuk sales will pass last year's 66.1bn ringgit as development projects move ahead, Customs Today reported.
"The hike in sukuk sales in Malaysia reflects an increase in Islamic liquidity as well as immense investor confidence in the long-term financial and political health of the country," said Islamic finance expert Umbreen Meenai of Pinsent Masons.
"Malaysia has traditionally been the world’s biggest sukuk market. The Ringgit is faring much better on the international markets and against the US dollar, following rumours that the Federal Reserve would raise interest rates soon. As Malaysia is the only net oil exporter among Asia’s major economies, a rebound in the price of Brent crude following a slump in the last three quarters may also be an important factor. The success of the sovereign issuance shows that Malaysia remains unaffected by Fitch Ratings’ threat to downgrade the country’s credit rating," Meenai said.
In January the Dubai-based AlHuda Centre of Islamic Banking and Economics predicted that Islamic banking and finance will exceed USD 2.5tnof assets in 2015 as the industry moves into new markets.
In October, the governor of Malaysia's central bank, Bank Negara Malaysia,said the $270bn global market for sukuk could become an "important source of funding" for infrastructure and other long-term projects.
For further information, please contact:
Tony Anderson, Partner, Pinsent Masons
tony.anderson@pinsentmasons.com
Michael Lewis, Partner, Pinsent Masons
michael.lewis@pinsentmasons.com
