RAKIA Sukuk (continued...) - Islamic Finance News

Deals of the Year 2007 Handbook
Maybank Subordinated Capital Sukuk (continued...)
Globally, the US$ subordinated Sukuk achieved the tightest
pricing ever for a US$ Sukuk (excluding supranational
issuers).
FINANCING PLAN AND STRUCTURE
(a) At Inception
The US$ subordinated Sukuk fi nancing structure entailed
establishment of two special purpose vehicle (SPV)
companies incorporated in Labuan solely for the purpose
of facilitating and ensuring the proposed Islamic fi nancing
structure is in compliance with the Shariah standards set
by the Shariah scholars in the Gulf Cooperation Council
(GCC) countries.
The GCC’s Shariah board also required that both the SPVs
were orphan companies, i.e. not owned by Maybank.
Under the transaction, Maybank transferred benefi cial
ownership interests in a portfolio of assets (Sukuk assets
which comprised Islamic fi nancial assets such as Ijarah
Islamic assets or other acceptable Shariah compliant
assets).
MBB Sukuk would then issue the US$ subordinated Sukuk to
investors, and proceeds from the issuance would be utilized
to fi nance the purchase of the Sukuk assets. As the seller of
the Sukuk assets, Maybank would then utilize these Sukuk
proceeds to fund its Islamic fi nance operations or business
activities.
The benefi cial interest in the Sukuk assets shall be ultimately
transferred in favor of MBB Sukuk, while the legal ownership
should remain at Maybank. In essence, the sale and
purchase of the Sukuk assets only refl ected the transfer
of the benefi cial ownership and there would not be any
physical movement of these Sukuk assets.
This effectively meant the MBB Sukuk held the Sukuk assets
on trust for the benefi t of the Sukuk holders who should
also be the benefi cial owners of the undivided fractional
ownership of the Sukuk assets.
MBB Sukuk, under a management agreement, would
appoint Maybank as a manager/wakeel to manage the
Sukuk assets and payment agent for all collections related
to the Sukuk assets and would then use these periodic
payments as periodic Sukuk payments.
The US$ subordinated Sukuk incorporated a deed of
purchase undertaking and deed of sale undertaking.
Pursuant to the purchase undertaking issued in favor of
MBB Sukuk, Maybank was required to purchase the US$
subordinated Sukuk upon maturity of dissolution for a price
equivalent to outstanding principal, plus profi ts accrued
and unpaid.
Conversely, MBB Sukuk would issue a sale undertaking in
favor of Maybank granting Maybank the rights to purchase
the US$ subordinated Sukuk at a prescribed price based on
the agreed redemption date.
(b) Ongoing
Maybank, in its capacity as manager, would collect any
payments from the Sukuk assets. MBB Sukuk would forward
continued...
Transaction Structure and Cashflows At Inception
Maybank
Manager of Sukuk Assets
Purchase Price of
Sukuk Assets
Purchase Price of
Sukuk Assets
Premier Sukuk
(SPV 1)
Sale of Sukuk
Assets
Sale of Sukuk
Assets
Purchase Undertaking
Sale Undertaking
MBB Sukuk
(Issuer SPV)
Sukuk proceeds
Sukuk Issue
Sukuk Holders
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