KWAP takes up RM1bil of MAS's RM2.5b perpetual Sukuk (Update)

KUALA LUMPUR: Malaysian Airline System Bhd (MAS)
issued RM2.5bil of perpetual junior bonds, of which RM1bil was fully
subscribed by Kumpulan Wang Persaraan Diperbadankan) (KWAP).
Group CEO Ahmad Jauhari Yahya
said on Tuesday that MAS had obtained firm commitments for the
remaining RM1.5bil. The long-term funding rate for the RM2.5bil Sukuk
is 6.9% per annum.
"Thus I am delighted to announce to you that
our entire Sukuk programme is fully subscribed. This firmly secures the
first pillar of our funding plans and is testament of the confidence in
Malaysia Airlines," he said at the signing ceremony for the establishment of the Sukuk programme.
The perpetual junior sukuk programme was arranged by Maybank Investment Bank Bhd.
Ahmad
Jauhari said the perpetual Sukuk would enable MAS to improve its
balance sheet and gearing as it was recognised as equity capital under
Malaysian accounting standards, but yet it would provide a relatively
reasonable long-term funding rate of 6.9% p.a.
"This perpetual
sukuk is the foundation of our funding plan, which in turn would be the
bedrock from which Malaysia Airlines would imminently launch its
programme of planned operational improvement initiatives, on its route
back to sustainable profitability," he added.
Ahmad Jauhari also
said the perpetual Sukuk was an appropriate product for MAS as it
captured the essence of equity at a relatively lower cost of capital
compared to common equity, whilst providing an attractive yield to
investors.
The perpetual Sukuk is redeemable at MAS's option after 10 years, and on every distribution date thereafter.
The
airline's debt offering is part of a RM2.5bil programme and the initial
RM1bil sukuk will pay a "prevailing-market profit rate," according to
an e-mailed statement on May 22.
The funds raised would be used
for working capital and to refinance existing loans, it said. The
carrier has RM1.3bil of loans outstanding and no bonds, according to
data compiled by Bloomberg.