All-time high for sukuk market
MALAYSIA’S sukuk issuance volume surged almost 68% year-on-year in 2007, charting an all-time high of about RM39.6bil of proceeds from 53 issues. This accounted for 64% of total funds raised from the domestic bond market last year.
A large portion of the proceeds had been used to finance a slew of listed companies’ privatisation exercises and leveraged buy-out schemes – the dominant theme of the Malaysian corporate scene in 2007.
The big boy’s club
Sectorial-wise, the telecommunications sector was the industry leader in 2007, with RM18.4bil of sukuk proceeds raised from 5 issues, accounting for about 46% of the sukuk market.
This is not surprising given that the largest sukuk transaction last year was valued at RM15bil, issued by Binariang GSM Sdn Bhd. The sukuk proceeds had been used to refinance an equivalent bridging loan of RM20bil, which had been initially taken up to fund the buy-out of Malaysia’s leading cellular company, Maxis Communications Bhd.
The remaining outstanding amount under the bridging loan is to be refinanced through a syndicated term loan of up to US$1.5bil.
