Infrastructure to be catalyst for sukuk issuance in 2015


KUALA LUMPUR: Funding for infrastructure projects will be the driver for sukuk issuances this year, says CIMB Islamic Bank chief executive officer, Badlisyah Abdul Ghani.

He said the sukuk issuance in 2015 could emulate the peak of 2012, if all planned infrastructure projects such as My Rapid Transit, the Pan-Borneo highway and Kuala Lumpur-Singapore high speed train venture come on stream.

“We nearly touched the 2012 level last year in falling short by just about RM2 billion.

“This year, we’ll be at the same point as last year and can test the 2012 level, if all planned infrastructure projects come stream,” he told reporters on the sidelines of the International Islamic Banking and Finance Law 2015 conference here yesterday.

Last year, Malaysia’s Sukuk issuance rose 27 per cent from 2013 to RM62 billion. Badlisyah said for the market to be sustainable, more mid size offerings of between RM1 billion and RM2 billion are needed, as compared to a single mega size issuance of RM20 billion.

“This provides more alternatives in the market.People in the secondary market can also trade actively,” he added.

He said Malaysia is expected to remain a dominant force in the Sukuk market this year, despite the emergence of new markets and competition from other countries within it.

“We have maintained a market share of 60 per cent year-on-year for several years now.But, whether, we can sustain this figure in the long term is anybody’s guess, as other jurisdictions are definitely coming into the market and building the right framework to encourage Sukuk within it.

“With more Sukuk making an entry, the Malaysian market share in the long run will probably be 20-30 per cent of the global share. I think that is comfortable as we don’t need to be very big forever, as we want to see more countries coming on board to develop the Sukuk market,” he added.

Meanwhile, on CIMB Islamic,Badlisyah said the bank is currently working on a few sovereign deals which are expected to come on stream in the middle of this year.

He said the bank would continue to be focused in growing its business not just in Malaysia but also across the globe.

“Last year, we did two sovereign Sukuks, two supra nationals and one social responsible Sukuk. We hope that we can do at least half of that this year, if not more,” he added.

Badlisyah said the bank is also looking to come up with a few infrastructure products, as well as explore business opportunities in the microfinance space.

“After two years of working to put in place a new core banking system, we are now ready to come with new innovations for the consumer banking space.

“We will definitely have some innovative and exciting campaigns for deposits and financing, while anticipating good growth in deposits for the consumer banking segment,” he added. — Bernama