The investment holding arm of the government of Malaysia, Khazanah Nasional, on October 13 successfully priced a 500 million renminbi (USD79 million) sukuk, representing the first global offshore renminbi-denominated sukuk.

 

The three-year deal, issued through a special purpose vehicle, Danga Capital, was priced through a book building process at the tightest end of the price guidance at 2.90 percent amid a difficult market environment.  The deal was initially set to be launched in September following the completion of the roadshow, but it was postponed due to severe market volatility.

 

The transaction generated a strong demand with the order book being 3.6x covered at more than one billion ringgit, enabling Khazanah to upsize the deal amount from the initial 300 million renminbi. It attracted a diverse group of over 35 accounts comprising financial institutions, asset management companies, private banks and statutory bodies from Malaysia, Singapore, Hong Kong, the Middle East and Europe. The deal was priced within the day and the book was covered within hours of the deal announcement.

 

“This is a major step forward for the sukuk market in Malaysia,” says Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz in a statement. “As a multi-currency sukuk origination centre, Malaysia is now offering the first ever renminbi-denominated sukuk in the world.”

 

Issued under the Malaysia International Islamic Financial Centre (MIFC) initiative, the offering is a landmark transaction as the first global Emas sukuk-denominated in renminbi.  Emas or gold sukuk denotes foreign currency-denominated bonds and sukuks originating from Malaysia.

 

“This first-ever renminbi-denominated sukuk by Khazanah is a historic achievement in the development of the global sukuk market and reaffirms Malaysia’s commitment to be a global Islamic capital market hub,” says Tan Sri Zarinah Anwar, chairman of Securities Commission Malaysia.

 

The sukuk manifests Khazanah’s continued commitment towards the expansion of Islamic finance in line with the Malaysian government’s agenda to establish the country as an Islamic finance hub. It likewise illustrates Khazanah’s efforts to push the envelope on transaction innovation and the competitive positioning for Islamic structures.

 

BOC International, CIMB and the Royal Bank of Scotland are the joint lead managers for the transaction, while CIMB Islamic acted as the Shariah adviser. The sukuk will be listed on Bursa Malaysia and Labuan International Financial Exchange.