The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Malaysia brings first Islamic global

Issuer: Malaysia Global Sukuk IncAmount: $600 millionLaunched: June 25 2002Bookrunner: HSBC

The Malaysian sovereign's successful launch of the world's first Islamic global bond, amidst considerable political turbulence, demonstrates both the strength of the country's credit and the sophistication of the sovereign as an issuer. The $600 million, five-year floating rate deal, for which HSBC was the sole bookrunner, pioneered an innovative structure that was designed to appeal to both mainstream and Islamic investors who are restricted by Sharia law which forbids the receipt or payment of interest.

The deal involves the use of a special purpose vehicle, Malaysia Global Sukuk, to purchase land parcels from a statutory body. The land is then leased back to the government. Investors purchase rated trust certificates (sukuk) from the SPV for the duration of the lease and receive periodic payments that are met with rental income from the government to the SPV of an amount equal to six-month dollar Libor plus the sovereign's spread.

Investors therefore receive regular payments that are comparable to coupons but are Shariah compliant since payment comes from the lease. The principal is repaid on expiry of the trust certificates through the government repurchasing the land at the agreed exercise price, which is a sum equal to the issue size of the trust certificates.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree