Khazanah Nasional issues RM1.27 billion exchangeable sukuk

PETALING JAYA: Khazanah Nasional Bhd has priced exchangeable sukuk of US$320.8 million (RM1.27 billion), which will be issued via a Labuan-incorporated independent special purpose vehicle Cindai Capital Ltd.

The exchangeable Sukuk would reference the value of H-shares in CITIC Securities Co Ltd , China's largest securities brokerage firm.

The state-owned investment fund said in a statement that the exchangeable sukuk, with a tenure of five years and an investor put option exercisable at the end of the third year, was priced through an accelerated book-building process.

"Structured with a zero periodic payment and 0.00% yield to maturity, the exchangeable sukuk achieved the tightest end of the initial guidance at an exchange premium of 40% above the volume weighted average price of CITIC Securities shares on January 17, 2018."
 
Khazanah said the transaction was fully covered shortly after launch and drew a final demand of 5.5 times book size, with 78 investors subscribing to the exchangeable sukuk comprising long only funds, hedge funds, arbitrage funds as well as asset managers across Asia and Europe.
 
Khazanah managing director Tan Sri Azman Mokhtar said the strong demand for the exchangeable sukuk underscores investors' confidence in the fund's creditworthiness.

"It was opportune for us to successfully price the deal on the back of positive market sentiments in China and Hong Kong."
 
The exchangeable sukuk is structured based on the principle of Wakalah and provides the sukuk holder with the option to receive cash or shares upon exchange.

CITIC Securities will be Khazanah's eighth offering in an exchangeable sukuk format, since the inaugural issue of Telekom Malaysia Bhd's exchangeable sukuk in 2006.

The exchangeable sukuk will be listed on the Singapore Exchange Securities Trading Ltd, Labuan International Financial Exchange Inc and Bursa Malaysia under the exempt regime.
 
CIMB and J.P. Morgan are the joint bookrunners and joint lead managers for this exchangeable sukuk transaction.