Bank Rakyat to issue RM10b sukuk to obtain long-term funding

by SHAZNI ONG / pic by ARIF KARTONO

BANK Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) is looking to issue up to a nominal value of RM10 billion for 30 years under its Sukuk Wakalah programme that will enable the bank to obtain long-term funding at a fixed rate.

The issuance of the sukuk will be carried out via a special purpose company, Imtiaz Sukuk II Bhd, while Maybank Investment Bank Bhd has been appointed as the principal advisor and lead arranger for the programme.

Bank Rakyat CEO Datuk Rosman Mohamed (picture) said the first issuance of the sukuk is expected to start soon through an issue size of RM500 million with the option to increase the issue.

“In addition to diversifying the composition of long-term funding, the programme will also reduce the bank’s dependency on corporate depositors, thus increasing the regulatory ratio for the banking business’ needs,” he told reporters after the signing ceremony of the programme in Kuala Lumpur last Friday.

For the first issue, Bank Muamalat Malaysia Bhd, CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd were appointed as joint lead managers.

The sukuk programme, which is structured based on the principles of Syariah Wakalah Bi Al-Istithmar and has been approved by the Securities Commission of Malaysia (SC), is given an AA2(s) rating by RAM Rating Services Bhd.

“This sukuk programme is offered for between three and five years,” Rosman added.

The Entrepreneur Development and Cooperatives (Medac) Minister Datuk Seri Wan Junaidi Tuanku Jaafar who witnessed the signing ceremony said the move is seen as another milestone for Bank Rakyat as it reflects the bank’s proactive approach in managing its liabilities.

“In this challenging economic landscape environment, the development of sukuk is very important as an alternative to the development of an economy. “If we observe, sukuk has contributed a lot to the increased effectiveness of the distribution of funds in the national and international financial system,” he said in his speech.

Wan Junaidi added that the sukuk market as a significant source of financing for large-scale investment projects plays an important role in facilitating the process of economic development.

“This is evident as sukuk has contributed 70% of the issuance of corporate bonds in the country since 2017.

“For investors, the sukuk market can provide greater potential to diversify their investments,” he said.