News on Covered Bonds: Malaysia’s first covered sukuk

December 2, 2013

Malaysia Building Society Bhd. is planning to issue the nation's first covered Islamic bonds, offering RM495 million[1] (S$192 million) of the debt next month paving the way for the world's first covered Shariah-compliant securities to be backed by receivables. The borrowing cost of such covered sukuk being less than normal debts, this is naturally a lucrative option for the sellers. The sale will be the first portion of a RM 3 billion programme announced last month and will be issued by Jana Kapital Sdn, a special-purpose company. The securities have been assigned an AA1 ranking by RAM Rating Services Bhd in Kuala Lumpur.

MBSB is tapping the Islamic debt market for the first time after the average global sukuk yield dropped 51 basis points, or 0.51 percentage point, to 3.78 per cent from a two-year high of 4.29 per cent reached on September 6, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index.[2]

In December 2012, Gatehouse Bank Plc in London became the first entity to sell covered sukuk backed by property.

 


[1] http://www.islamicfinance.de/?q=node/5829

 

[2] http://www.btimes.com.my/articles/20131121155339/Article/

 

Reported by: Shambo Dey