Issuer: SP Setia
Size: RM1 billion
Structure: Wakala bi al-istithmar
Tenor: Three, five, seven years
Banks: HSBC Amanah, Maybank Investment Bank, RHB Investment Bank (joint lead managers)
Date: June 2023
There are certain corporate blue-chip issuers in any market that will always attract strong demand from investors. In Malaysia, real-estate development company SP Setia is one of those borrowers, regardless of what it is looking to raise on the debt capital markets.
Year after year, the company is one of Malaysia’s most regular and high-profile domestic issuers, and especially most recently in sukuk, a market the developer accessed for the first time in 2021, issuing from its RM3 billion ($620 million) sukuk wakala programme.
The company returned to the domestic sukuk market in 2022, and again last year with what is its largest and best sukuk yet – a RM1 billion deal across three- (RM150 million), five- (RM450 million) and seven-year tranches (RM400 million).
The sukuk notched-up several firsts: the largest sukuk from the sector; the company’s largest orderbook; and the largest number of investors in the orderbook
Such was the level of demand – which topped RM2.9 billion across 33 diversified, high-quality accounts – the issuer and the banks increased the deal size from the initial RM750 million, and priced the larger RM1 billion transaction at spreads over domestic government debt of 85, 88 and 92 basis points for the three-, five- and seven-year tranches, respectively.
The profit rate for three-year was 4.30%, 4.41% for the five-year, and 4.56% for the seven-year.
Asset managers and banks dominated the distribution across the three tranches, with greatest participation from private banks, insurers and pension funds in the five-year and seven-year trades.
Impressively, the sukuk notched-up several firsts: the largest sukuk from the sector; the company’s largest orderbook so far; and the largest number of investors in the orderbook.
Proceeds from the sukuk – Asia’s best Islamic real estate deal – will be used to fund capital investment in the Battersea Power Station development in London, a development SP Setia is a consortium partner in, as well as refinance earlier borrowings raised to fund this project.
