Bank Pertanian Malaysia Bhd (Agrobank) recently announced its Sukuk Wakalah Programme based on the Islamic principle of Wakalah Bi Al-Istithmar valued at RM1 billion.
According to Chairman Datuk Mustapha Buang, for the first phase, Agrobank is planning to issue up to RM500 million in Sukuk Wakalah. Agrobank is a development financial institution (DFI) with a primary focus on strengthening the agriculture sector in Malaysia,
Furthermore, the chairman believes that Sukuk being an innovative instrument could further strengthen Malaysia’s standing as a global Islamic Finance hub and solidify its position as a leader in the Islamic capital markets.
“Proceeds from the Sukuk issuance will be utilized for working capital requirements, general investments, and/or to refinance any existing financing of Agrobank which are Shariah-compliant, hence steering the growth of the bank in the post-pandemic era.
“Our aim is to establish stable funding by securing the lower cost of medium and long-term funding and it is hoped that it would be well received by a broad range of investors from high-quality accounts including government agencies, financial institutions, asset management companies, and corporate accounts,” he said in a statement today.
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Concurrently, the rating agency has assigned a preliminary rating of AAAIS to the bank’s proposed RM1 billion Islamic medium-term notes program (IMTN program) and the rating outlook is stable.
Malaysian Rating Corp. Bhd (MARC) has rated Agrobank as a AAA financial institution. In addition, rating agency RAM Sustainability Sdn Bhd has assigned the Environmental Benefit (EB) rating to Agrobank’s Sukuk program.
The favorable rating assigned to the Sukuk Programme shows the strong fundamentals of Agrobank and the strategic importance of its business operations to the government of Malaysia given its role as one of the key enablers in the nation.
For the first tranche of the issuance, Agrobank had opted to issue normal senior Sukuk and may issue sustainable Sukuk in the future, it added.
The role of sole principal adviser, sole lead arranger and sole lead manager for this Sukuk program exercise is being executed by Maybank Investment Bhd.