Danajamin issues inaugural RM500m Tier-2 subordinated sukuk

By NG MIN SHEN / Pic By ISMAIL CHE RUS

Danajamin Nasional Bhd has issued its inaugural Tier-2 subordinated sukuk of RM500 million, part of a debt programme of up to RM2 billion for the issuance of senior and subordinated sukuk murabahah.

Danajamin CEO Mohamed Nazri Omar said the Tier-2 sukuk is a component of Danjamin’s capital management plan, which is in line with regulatory requirement to continue stimulating the local bond and sukuk markets.

“This sukuk programme provides an alternative to the company in sourcing for additional capital. This will also increase our ability to meet our developmental mandate of bringing new and viable companies into the debt capital market,” he said in a recent statement.

It has a tenure of 10 years, with a callable option made available from the fifth year onwards.

Its inaugural issuance was oversubscribed, receiving an overwhelming response of some RM800 million from a diverse range of investors and achieving a yield of 4.8%.

Thus the issuance was expanded from the initial size of RM300 million to RM500 million, of which RM400 million is offered to investors and the remaining RM100 million subscribed via private placement.

Mohamed Nazri said investors in the sukuk include asset managers, financial institutions, pension funds and insurance companies.

“We were able to attract a total of 16 investors to participate in this inaugural issuance,” he said.

RAM Rating Services Bhd has rated the sukuk AA1, while Malaysian Rating Corp Bhd has given it a rating of AA+.

The sukuk, which will be redeemed at its full nominal value upon maturity, falls under the company’s subordinated, unsecured obligations.

The joint principal advisors and joint lead arrangers for the programme are AmInvestment Bank Bhd and Maybank Investment Bank Bhd (Maybank IB), while the joint lead managers for the first issuance are AmInvestment, Maybank IB and Hong Leong Investment Bank Bhd.

Danajamin is the country’s first financial guarantee insurer, established in 2009 to broaden access to the corporate bonds market with focus on projects related to economic transformation initiatives.

To date, it has guaranteed RM9 billion worth of conventional and Islamic bond programmes issued by 31 viable Malaysian corporations across various sectors, and has brought about a market impact of approximately RM16 billion through its risk-sharing collaboration with partner banks.

As at end-June 2017, Danajamin’s total assets stood at RM2.1 billion, while shareholders’ equity amounted to RM1.6 billion.