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US$25-US$30 billion to be issued in M’sia next year

Posted on November 26, 2011, Saturday

INCREASING SIZE: Badlisyah says sukuk currently accounts for 38.2 per cent of the total bonds outstanding.

KUALA LUMPUR: A total of US$25-US$30 billion worth of new sukuk (Islamic bond) issuances are expected to be issued in Malaysia next year despite a slow down in the global economy.

CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani said sukuk currently accounted for 38.2 per cent of the total bonds outstanding.

In the first half of this year, the Securities Commission had approved 19 sukuk issues worth RM32 billion, of which RM24.6 billion has been issued.

“In general, 2007 was the record year for sukuk issuances, which was roughly about US$24 billion to US$25 billion. This year we anticipate to close higher in terms of total new sukuk issuances.

“Next year, we aim at the same level. Of course, we always aspire to do more but is a bit difficult to say every year we will beat the previous year’s record.

“Between US$25 to US$30 billion sukuk issuance year-on-year is something that is reasonable to anticipate,” he told reporters on the sidelines of the 16th Malaysian Capital Market Summit here yesterday.

At global level, CIMB has done roughly about US$5 billion issuance, accounting for 19 per cent world market share, placing the banking group as number one.

Earlier, Badlisyah, one of the panellists at the summit, spoke on the challenges and prospects of the bond market.

On the acceptance of the ringgit as a denominator for sukuk, Badlisyah said investors were now looking at the ringgit.

“They are a bit more sophisticated in terms of their need to diversify exposures. Ringgit is being looked into by investors,” he said.

Badlisyah said Malaysian Islamic bonds are tightly-priced due to high quality issuers.

“This is the main reason why investors from the GCC (Gulf Cooperation Council) countries don’t come in to buy our papers because the returns they get from investing is in ringgit papers,” he said.

On this note, he said, Malaysia needs to develop over time high-yield income market.

Badlisyah said the main challenge in sukuk was whether an issuer or an investor can easily undertake sukuk transactions.

“If the challenges in enabling transactions are resolved, the volume can be even more,” he added. — Bernama

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