Proceeds of Khazanah's Sukuk issuance to be utilised to refinance Penerbangan Malaysia Bhd’s US$1 billion guaranteed notes maturing this year.

KUALA LUMPUR: Khazanah Nasional Bhd has priced a five-year USD750 million (about RM3.15 billion) US Dollar-denominated straight Sukuk to refinance Penerbangan Malaysia Bhd’s guaranteed notes at lower cost.

The USD Sukuk was priced at a profit rate of 3.035 per cent following an accelerated bookbuilding process that attracted demand of 1.5 times booksize from financial institutions, asset management companies, statutory bodies and insurance companies.

Despite challenging market conditions, Khazanah achieved its target issue size at a spread of 178 basis points above prevailing five-year US Treasuries, it said in a statement.

This will be Khazanah’s first USD straight sukuk issuance, done via Malaysian-incorporated special purpose vehicle Danga Capital Bhd.

“Proceeds of the USD Sukuk will be utilised to refinance Penerbangan Malaysia Bhd’s US$1 billion guaranteed notes maturing this year,” it added.

Capitalising on low US Treasury yields, Khazanah was able to refinance these notes which were guaranteed by the government at a savings of 2.590 per cent per annum against the current 5.625 per cent coupon while simultaneously reducing the Malaysian Government’s contingent liability.

“The USD Sukuk issuance demonstrates Khazanah’s ability to access the debt capital markets and achieve a competitive spread against a backdrop of market volatility.

“This issuance is another milestone for Khazanah, which has consistently closed innovative and landmark transactions,” said its chief financial officer, Mohd Izani Ghani.

The USD Sukuk, which is structured under the Syariah principle of Wakalah1 utilising Syariah-compliant shares and Syariah-compliant commodities, will be listed on Bursa Malaysia Securities Bhd (under an Exempt Regime), Labuan International Financial Exchange Inc and the Singapore Exchange Securities Trading Ltd. – BERNAMA


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