IIFM Issues its first Sharia'a Fatwa for Malaysia Global Sukuk Inc.

Manama (Bahrain): The International Islamic Financial Market is pleased to announce that its Sharia’a Supervisory Committee has endorsed its first product i.e. the issuance of the world’s first rated global sovereign Islamic securities by Malaysia Global Sukuk, Inc. This endorsement gives the product a wider acceptability as it is accepted as sharia’a compliant in major markets including Bahrain, the Middle East, Malaysia, and Europe.

This 5-year USD 600.0 million floating rate Global Islamic Trust Certificate issue which carries a Moody’s rating of Baa2 (positive) and Standard and Poor’s rating of BBB (positive) was issued by Malaysia Global Sukuk, Inc., a special purpose company which is wholly owned by the Government of Malaysia through the Minister of Finance, Inc. This issue has been targetted towards new investors especially in the Middle East, hence the Islamic structure. The yield is equivalent to LIBOR+95 basis points.

The transaction involves Malaysia Global Sukuk issuing USD 600.0 million sukuks (trust certificates) to finance the purchase of beneficial title to parcels of land located in or around Kuala Lumpur, Malaysia. The issuer will in turn lease the parcels of land to the Government of Malaysia under a lease agreement with rental payments due semi-annually. These rental payments will be used to meet the periodic distribution amounts due on the sukuks. In addition the Government of Malaysia will be required to purchase the beneficial title to the lands at the exercise price plus expenses at the dissolution date, such amount to be used to repay principal on the sukuks.

HSBC Amanah Finance, HSBC Financial Services (Middle East) Limited, Dubai was the sole lead manager and sole bookrunner. The co-managers were Maybank Berhad (Malaysia), The Standard Chartered Bank (Labuan, Malaysia), Abu Dhabi Islamic Bank, Dubai Islamic Bank, ABC Islamic Bank and the Islamic Development Bank, Jeddah.

A strong delegation from Malaysia led by senior Malaysian Ministry of Finance officials, Malaysia, and senior Bank Negara Malaysia (Central Bank of Malaysia) officials and HSBC went to major financial centers including Hongkong, Dubai, Abu Dhabi, Bahrain, Jeddah and London to explain the transaction to potential investors, both Islamic and conventional.

The issue was a success as it received positive response from investors across the markets and was oversubscribed by more than two times. In the final allocation, fifty-one percent of the total subscription came from Middle East investors, thirty percent from Asia, fifteen percent from Europe, and four percent from the United States. In line with the intention of the issuer, sixty-five percent of the subscription was from new investors.

The success of the issue is very significant to IIFM as it is evident that a well structured sharia’a compliant instrument can have a wider appeal not only in Muslim countries but also among conventional investors.

The IIFM was established on 1st.April 2002 as a result of a joint effort between the central banks/monetary agency of Bahrain, Brunei Darussalam, Indonesia, Malaysia, Sudan, and the Islamic Development Bank, Jeddah, with the aim of creating an environment that will encourage active trading of sharia’a compatible instruments among Muslim countries and among both Islamic and non-Islamic financial institutions.

The members of the Sharia’a Supervisory Committee are:

Bro. Mohd. Taqi Usmani (Pakistan)
Bro. Dr. Sheikh Mohammed A. Elgari (Saudi Arabia)
Bro. Sh. Nizam Yaqubi (Bahrain)
Bro. Dr. Ahmad Ali Abdalla (Sudan)
Bro. Assoc. Prof. Dr. Mohd. Daud Bakar (Malaysia)

 

Members of the Market and Product Development Committee are: -

Bro. Dr. Bakri A. Bashir (Bahrain Monetary Agency, Bahrain)
Bro. Ahsley Freeman (Bahrain Monetary Agency, Bahrain)
Bro. Mohamed BuQais (ABC Islamic Bank, Bahrain)
Bro. Mohamed Hisham Dafterdar (Islamic Dev’t Bank, Jeddah)
Bro. Zainol al-Mahmood (Islamic Dev’t. Bank, Jeddah)
Bro. Mustapha Hamat (Islamic Banking and Finance Institute, Malaysia)
Bro. Wan Abdul Rahim Kamil (Abrar Discount Berhad, Malaysia)
Bro. Osman Hamad Mohammed Khair (Bank of Sudan, Sudan)
Bro. Iqbal Khan (HSBC Financial Services, Dubai, U.A.E.)

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