Bank Islam Malaysia has successfully issued the third tranche of RM700 million subordinated sukuk murabahah under its RM10 billion Sukuk Murabahah Programme on 21 October 2020. The sukuk is the second subordinated sukuk issued by Bank Islam in 2020.
The sukuk qualifies as Tier 2 regulatory capital of Bank Islam in compliance with Bank Negara Malaysia’s Capital Adequacy Framework for Islamic Banks (Capital Components). Hence, it will enhance the capital adequacy of Bank Islam in line with Basel III requirements. This sukuk is redeemable at their full nominal value upon maturity, comes with a call option on the fifth anniversary and is rated A1/stable by RAM Rating Services.
Bank Islam lodged the Sukuk Murabahah Programme with Securities Commission Malaysia on 6 September 2018. Under the programme, the Bank has the flexibility to issue subordinated sukuk murabahah and/or senior sukuk murabahah during the availability period of the Sukuk Murabahah Programme.
RAM Ratings has awarded a final long-term rating of A1/stable and AA3/stable to the subordinated sukuk murabahah and senior sukuk murabahah respectively under the Sukuk Murabahah Programme. Bank Islam is also the Principal Adviser, Lead Arranger, Lead Manager and Shari'ah Adviser for the Sukuk Murabahah Programme.
Bank Islam CEO Mohd Muazzam Mohamed said, “The Sukuk Murabahah Programme of RM 10 billion is the second sukuk programme established by Bank Islam. The programme issued its first tranche on 7 November 2018 amounting to RM300 million, followed by the second tranche on 26 March 2020 with an amount of RM400 million.”
“Historically, Bank Islam established our first Sukuk Programme in the form of (a) Subordinated Sukuk Murabahah Programme of RM1 billion in three tranches in October 2014. The bank issued the first tranche of RM300 million in April 2015, the second tranche of RM400 million in December 2015 and the third tranche of the programme amounting to RM300 million in November 2017,” he elaborated.