Khazanah issues world’s first yuan sukuk

KUALA LUMPUR: Khazanah Nasional Bhd has issued a three-year benchmark offshore 500 million yuan (RM246 million) sukuk, the first of its kind in the world, via a special purpose vehicle, Danga Capital Bhd.

The government-linked investment fund said the sukuk was successfully priced through a book-building exercise yesterday, and at the tightened end of the price guidance at 2.9%.

“The transaction drew a demand of 3.6 times book size, enabling Khazanah to upsize the deal from an earlier size of 300 million yuan to 500 million yuan,” it said.

Khazanah said the deal attracted a diverse group of investors comprising financial institutions, asset management companies, private banks and statutory bodies from Malaysia, Singapore, the Middle East and Europe.

“The sukuk demonstrates Khazanah’s continued commitment towards the expansion of Islamic finance in line with the government of Malaysia’s agenda to establish Malaysia as an Islamic finance hub,” it said in the statement yesterday.

Issued under the Malaysia International Islamic Financial Centre (MIFC) initiative, the sukuk is the first in the world to be denominated in yuan. The sukuk will be listed on Bursa Malaysia (Exempt Regime) and Labuan International Financial Exchange (LFX).

China Banking Regulatory Commission chief adviser Tan Sri Andrew Sheng said the pioneering yuan product would cater to both conventional and Islamic investors.

“This is an innovative, market driven and major step forward in the development of the offshore yuan market and supports the Chinese government’s move to internationalise the yuan,” he said.

Khazanah managing director Tan Sri Azman Mokhtar said the issuance is a benchmark for offshore yuan securities, while the order book in excess of one billion yuan underlines the market’s confidence in Khazanah’s credit.

BOC International, CIMB and The Royal Bank of Scotland were the joint lead managers for this sukuk offering with CIMB Islamic as the syariah adviser.