The Q&A was conducted with Mohd Izani Ghani, director and chief financial officer of Khazanah Nasional:
1. Why did you use this particular Islamic structure? What other structures were considered?
The first RM issuance from the program under Danga in April 2009 was under the Musharakah structure. It is widely accepted by investors in Malaysia. However when structuring cross-border deals, we want to ensure the widest acceptance to potential investors. Hence, the Wakalah structure which has been applied by GCC issuers for offshore issuances was adopted. The structure was also chosen due to the familiarity of the Monetary Authority of Singapore compared to other structures, thus enabling a smooth approval process.
2. What were the challenges faced and how were they resolved?
• Timing: The transaction was completed within a very tight timeframe.
• Market: The introduction of a relatively new Islamic structure such as the Wakalah structure in the SGD market was addressed via an investor education process. Khazanah held a one day roadshow meeting cornerstone investors prior to the launch to address this.
3. Geographically speaking, where did the investors come from?
Of the investors, 45% were from financial institutions, 18% from the insurance sector, Am investors 15%, were from 8% were private banks, 6% were sovereign funds and 1% were made up of corporate investors. Most came from Singapore (65%), with 15% from Malaysia, 14% from Hong Kong, 2% from Brunei and the remaining 2% were European.
4. Was this deal rated?
Credit rating is not a prerequisite for fixed income issuance in the SGD debt capital market. Given that Khazanah is a sovereign development fund and recognizing that Khazanah is still embarking on its transformation process, a credit rating which demands disclosure may not do justice as to the true worth of Khazanah. Notwithstanding this, the Sukuk demand was overwhelming and testament of Khazanah’s strong credit and solid fundamentals. |