UOB Malaysia establishes inaugural RM5 billion Islamic debt programme
Published on: Thursday, January 25, 2024
By: Bernama
UOB Malaysia’s sukuk at a 4.01% profit rate was 45 basis points above the benchmark Malaysian Government Securities.
PETALING JAYA: United Overseas Bank (Malaysia) Bhd (UOB Malaysia) has established its inaugural RM5 billion Islamic debt programme under the Wakalah Bi Al-Istithmar shariah principle.
“During the book-building exercise, the Islamic debt offering received an overwhelming response from the market and was oversubscribed by approximately 3.39 times,” the bank said in a statement today.
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The final order book of RM1.7 billion enabled UOB Malaysia to close at a fixed profit rate of 4.01% per annum, it added.
At 45 basis points above the benchmark Malaysian Government Securities, this was the tightest spread ever recorded for a Tier 2 capital instrument in the ringgit-denominated market to date.
“We are pleased that our first sukuk offering was very well received by the market. The oversubscription and the tight pricing achieved reflect investors’ confidence in UOB Malaysia’s solid financial position.
“The strong demand is also a testament to the liquidity in the local debt capital market and its robustness in supporting local corporates’ financing needs,” said CEO Ng Wei Wei.
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The bank also shared that a diverse group of 42 high-quality investors, including insurance companies, fund managers, government-linked investment companies, banks and private banks subscribed to the offering.
The bank also announced the successful pricing of its debut RM500 million Basel III-compliant Tier 2 subordinated Islamic medium term notes (Tier 2 Sukuk Wakalah) which are due in February 2034 and callable in February 2029.
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The Tier 2 Sukuk Wakalah received an AA1 rating by RAM Rating Services Bhd, underscoring UOB Malaysia’s robust credit profile, it noted.
The issuance is scheduled on Feb 8, 2024 and is intended to qualify as UOB Malaysia’s Tier 2 capital on a consolidated basis, adhering to Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components).
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