Gulf Investment Corporation GSC, Kuwait issues MYR750 million five year Sukuk
Gulf Investment Corporation GSC, Kuwait (“GIC”) has on 3 August 2011 successfully issued MYR750 million (USD253 million) under its existing 20 year MYR3.5 billion (USD1.18 billion) Sukuk Wakalah bi Istithmar Medium Term Notes Programme (the “GIC Sukuk”). AmInvestment Bank Berhad (“AmInvestment Bank”) acted as the Sole Lead Manager for this GIC Sukuk issuance with AmIslamic Bank Berhad appointed as the Transaction Agent to facilitate the commodity trading via the Suq Al-Sila’ trading platform on Bursa Malaysia (“Bursa Suq Al-Sila’”). This is the second issuance from the GIC Sukuk and the fourth issuance from GIC in Malaysia since 2008.
The GIC Sukuk which has been assigned a long term rating of AAA by RAM Rating Services Berhad will enable GIC to tap the Malaysian capital markets for long-dated funding and improve its asset-liability management, thereby mitigating and interest rate risks.
The second issuance from the GIC Sukuk in 2011 has a tenure of five (5) years and carries a semi-annual profit payment of 4.90% per annum. In March this year, GIC had sold its first tranche of MYR600 million (USD202million) of five (5) year GIC Sukuk in Malaysia at a yield of 5.25% per annum. GIC and AmInvestment Bank had conducted investor presentations in Kuala Lumpur in mid July followed by an accelerated private placement process.
Despite the recent uncertainties in the global markets, the issuing pricing process was competitive and managed to come in tighter than the issuance in March, meeting with GIC’s current target pricing levels. A broad range of local investors including fund managers, insurance companies, financial institutions and government agencies participated in the issue which represents the largest issue launched to-date for GIC in Malaysia. In 2008, GIC had issued its inaugural dual-tranche conventional bonds with tenures of five (5) years (MYR600 million or USD202 million) and fifteen (15) years (MYR400 million or USD135million) in the Malaysian capital markets, the first by a GCC issuer.
“GIC is pleased to have successfully completed our fourth issuance in Malaysia since our inaugural issuance in 2008, making us a frequent foreign issuer which offers an additional avenue to diversify our sources of funding as part of the management’s efforts to enhance its liquidity risk management structure. We anticipate more issuers from the GCC region following suit in tapping into non-traditional sources to obtain long term funds,” said Mr. Hisham Al–Razzuqi, Chief Executive Officer of GIC.
“We are also pleased that the Islamic medium term notes which was structured in accordance with the Shariah principle of Wakalah bi Istithmar was an innovative structure which met the Shariah compliance of both Kuwait where GIC is based and Malaysia where the Sukuk is issued. We were also able to support the Suq al Sila’ initiatives by Bursa Malaysia as part of the broader Malaysian government strategy under Malaysia as an Islamic Financial Centre (“MIFC”) initiatives spearheaded by Bank Negara Malaysia since August 2006,” added Mr. Al Razzuqi.
The GIC Sukuk is based on the underlying Shariah principles of Wakalah (agency) and Istithmar (investment). GIC, as the Issuer will issue the Sukuk in one or several series under a programme. The investors will provide capital as investment for their subscription of a particular series.
“AmInvestment Bank is pleased to have successfully completed this transaction, whereby we were able to provide a one-stop solution for GIC from lead managing the issuance, facilitating the swap transaction and acting as the Transaction Agent under Bursa Suq Al-Sila’ commodity trading platform under AmIslamic Bank Berhad, a wholly owned subsidiary of the AmBank Group,” said Mr. TC Kok, Managing Director/Chief Executive Officer, AmInvestment Bank.
The 20-year Programme will provide GIC greater flexibility to issue Sukuk of varying tenures of up to 10 years on a “need to” basis from time to time to fund its general working capital requirements that conform to Shariah principles at competitive pricing given its strong credit rating, underscored by its strengthening credit fundamentals and improved asset quality.
“Moving forward, with our investment banking capacity, expertise in the Islamic capital markets and established track record, AmInvestment Bank aims to be a key enabler for GCC issuers accessing the Malaysian Islamic capital markets,” added Mr. Kok.
Gulf Investment Corporation
GIC is an investment company incorporated in the State of Kuwait on November 15, 1983 as a Gulf Shareholding Company. It is equally owned by the governments of the six member states of the Gulf Cooperation Council (GCC), i.e., Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. GIC was formed to foster economic growth, economic diversification and capital markets development across the GCC region. Our experienced team offers local and international investors a diverse range of financial opportunities. We have a proven track record for successfully assisting private enterprise across a broad range of industry sectors and effectively delivering innovative investment opportunities.