Innovations in Islamic Finance 2015: Malaysia Airports Holdings
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Innovations in Islamic Finance 2015: Malaysia Airports Holdings

RM1 billion sukuk

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Malaysia has always been a hub for Islamic finance innovation, and continues to be so. Many deals that came out of the country over the last year took the industry forward: Meximbank’s first dollar sukuk for an Eximbank; the Malaysian arm of Bank of Tokyo-Mitsubishi UFJ’s multicurrency programme that included the first yen sukuk in the global markets; AmIslamic’s groundbreaking bank capital issue; yet another innovative exchangeable from Khazanah – its sixth.

The one we highlight here was a RM1 billion sukuk from Malaysia Airports Holdings, the world’s first rated corporate perpetual sukuk.

The rating part of it was important because Malaysia Airports is among the highest rated issuers in the country and wanted to maintain the benefit of that rating in the pricing. It operates and manages 39 airports in Malaysia, as well as three others in India and Turkey, and holds a (local) AAA rating. “The objective of issuing the perpetual subordinated sukuk,” explains Maybank, a bookrunner, “was to maintain MAH’s AAA corporate rating status and to avoid breaching its senior covenants.”

To do so, the sukuk was structured to achieve a 50% equity credit from the rating agencies; any other outcome would have pushed the issuer’s senior debt to a level that would have breached the AAA rating.

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