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deals of the year
results
Size
Issuer
Arranger
Legal Counsel for the Banks
Most Innovative: Malaysia Airline System RM1.5 billion (US$493 million) Perpetual Junior Sukuk
US$493 million (RM1.5 billion) in two issuances
Malaysia Airline System
Maybank Investment Bank
Adnan Sundra & Low
Maybank Investment Bank advised Malaysia Airline System (MAS) on the issuance of Perpetual Junior Sukuk in a program of up
to RM2.5 billion (US$821.69 million) in nominal value. The privately placed deal took place after MAS suffered the largest loss in
its history of RM2.5 billion in the financial year ending the 31 st December 2011.
This loss wiped out two-thirds of its equity capital, causing an urgent need to re-capitalize. MAS sought an instrument which
would minimize the risk of shareholder dilution. Maybank Investment Bank proposed a perpetual Sukuk with a Musharakah
deal to form the perpetual Sukuk and a secondary Musawama to deliver the desired deferred coupon. The Musharakah ensures
that the Sukuk is recognized as equity for accounting purposes, and taps a wider investor base (which includes strictly Shariah
investors). As the perpetual Sukuk is a hybrid instrument, it serves as a unique balance sheet management tool for MAS by being
priced as a subordinated debt yet deemed as equity for accounting purposes.
The perpetual Sukuk marks the first perpetual Sukuk instrument issued by a corporate in Malaysia and the world. This unique
issuance introduced a new asset class, thus deepening the Malaysian bond market, and paves the way for future issuances of
perpetual bonds.
Honorable Mention: WIENCO (Ghana); YAAS Sukuk 1; ADIB Tier 1; Pakistan State Oil Company; and Engro Fertilizer.
Size
Issuer
Luxembourg Law
International Counsel
Ijarah: FWU Group US$55 million Sukuk Ijarah
US$55 million
FWU Group
Loyens & Loeff
Vinson & Elkins
After a long wait, the structures first developed for the 2005 Saxony-Anhalt Sukuk were applied by the German insurer and wealth
manager FWU Group. The bonds were issued through a Luxembourg SPV incorporated using a Dutch Stichting (foundation)
structure. Despite the anemic conditions in the European financial markets, FWU was able to issue an Ijarah Sukuk based on the
sale and leaseback of intellectual property rights. This is the first Sukuk to utilize a computer software program as the underlying
asset and is therefore groundbreaking in a number of ways.
Honorable Mention: Saudi Electricity Company; Sabana Treasury; Government of Dubai, Department of Finance; Tanjung Bin
Power; Republic of Turkey/ Hazine Müsteşarliği Varlik Kiralama anonim şirketi; Republic of Indonesia; Brunei Gas Carriers;
Kimanis Power; State of Qatar Sukuk A; Kuala Lumpur Kepong; and Ghani Glass.
Equity: Sabana REIT SG$80 million (US$65 million) Convertible Sukuk al Ijarah
Size
US$65 million (SG$80 million)
Issuer
Sabana REIT
Arranger & Bookrunner
Morgan Stanley Asia (Singapore)
Legal Counsel for the Issuer
Allen & Gledhill
Legal Counsel for the Banks
Clifford Chance
Albeit small, the Sabana Treasury convertible Sukuk Ijarah achieves landmark status as it is the first ever Sukuk convertible into
units of a real estate investment trust. The deal is the first convertible Sukuk issued globally since 2009.
This transaction is a significant milestone in the development of Islamic finance in Singapore not only for being the first convertible
Sukuk issued, but because it is the first Islamic finance deal to be based on Jurong Town Corporation properties. The Sukuk
were issued under a combination of the Shariah financing principles of Tawarruq and Ijarah. The proceeds were used to acquire
a property for Sabana REIT with cash from the Tawarruq, and then making the REIT Wakeel to own the property whilst entering
into a master Ijarah for the property to be leased to the REIT. The deal’s success demonstrated how the regulatory and tax
infrastructure in Singapore are supportive of complex Sukuk structures.
Honorable Mention: Felda; Astro Malaysia Holdings; and, IHH Healthcare.
36 March 2013