The bank has emerged the highest issuer after helping issue RM21.2b worth of sukuk

by BHUPINDER SINGH & SHAZNI ONG/ pic by MUHD AMIN NAHARUL

BANK Islam Malaysia Bhd is the top domestic sukuk broker for the first half of the year (1H), after helping issue US$5.15 billion (RM21.21 billion) worth of sukuk in the market, with the bulk of the figure coming from the sukuk issued by Urusharta Jamaah Sdn Bhd totalling RM27 billion in May.

Bank Islam’s market share of the sukuk issued accounted for 29.03% of the total ringgit-denominated sukuk issued in the 1H. The bank advised on 10 issues for the period.

In the same period last year, the bank, owned by BIMB Holdings Bhd, only had a 2.16% market share of the sukuk issuance business and was ranked 10 in the market, according to Bloomberg.

Urusharta Jamaah is a special-purpose vehicle (SPV) established under the Ministry of Finance to buy over underperforming properties and equities stakes from Lembaga Tabung Haji in exchange for RM10 billion in non-tradable sukuk, and RM9.9 billion in Islamic redeemable convertible pre- ference shares as part of a restructuring plan of the pilgrim’s funds.

BIMB Holdings in turn is 53.8% —owned by the pilgrimage fund.

The second-largest issuer in the 1H is Maybank Investment Bank Bhd, which was ranked first last year for the same period after having helped issue US$4.1 billion of sukuk.

The bank helped undertake 67 issues including RM495.43 million raised by Midciti Sukuk Bhd in April, and RM3.15 billion raised by DanaInfra Nasional Bhd in March.

In July, Maybank helped companies like Boustead Holdings Bhd in raising RM650.97 million as well as some RM700 million by Bumitama Agri Ltd and RM200 million by DRB-Hicom Bhd.

Analysts expect the local sukuk market to remain active driven by capital raising by government and corporates for major construction works such as the East Coast Rail Link, Light Rail Transit Line 3 and Mass Rapid Transit Line 3 projects.

“The interest for sukuk is positive in view of the implementation of infra projects and to some degree, banks have been issuing subordinated debts in order to beef their total capital ratio.

“The anticipation of lower Overnight Policy Rate could also spur interest among the issuers to consider sukuk issuance as this will translate into lower funding cost. Not to mention possible mark-to-market gain from the fixed income investors’ point of view should bond yields go lower,” Bank Islam’s chief economist Dr Mohd Afzanizam Abdul Rashid said.

According to a report published by Bloomberg entitled “Islamic Capital Markets League Tables” for 1H19, the industry breakdown for domestic sukuk in the 1H saw 67% of sukuk issued by financials, 17% by government, utilities 13% and others (4%).

The third-largest sukuk broker in the 1H is CIMB Investment Bank Bhd which had a table share of 10.71% and helped raise US$1.9 billion with 64 issues.

CIMB was ranked second for the same period last year. Among the issues the bank helped on were the RM272 million raised by Malaysia Debt Ventures Bhd as well as the RM300 million by UEM Sunrise Bhd.

RHB was ranked fourth in the issuer league table helping raise US$1.25 billion in the 1H and accounted for 7.07% of the market share.

The bank did 44 issues including RM440 million raised for PNB Merdeka Ventures Sdn Bhd and RM1.08 billion for Pengurusan Air SPV Bhd.

AmInvestment Bank Bhd came in fifth in the ranking, helping raise US$1.05 billion from 35 issues which accounted for 5.96% of the market share.

Among the major issues it helped was RM300 million raised by Sunway Bhd in March, as well as RM320 million by MNRB Holdings Bhd.