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Saudi Mall Operator ACC Latest Corporate to Issue Maiden Benchmark US$500m Sukuk

Jeddah – Saudi Arabia’s biggest mall operator, Arabian Centres Company (ACC), is the latest Saudi corporate to venture into the international Sukuk Market with a debut Sukuk offering on 26 November.

In a disclosure to the Saudi Stock Exchange (Tadawul), ACC confirmed the closure of the benchmark US$500 million Sukuk, which has a tenor of five years and was priced at a profit rate of 5.375% per annum.

ACC had mandated Goldman Sachs International and HSBC as Joint Global Coordinators for the transaction, who together with Credit Suisse, Emirates NBD Capital, Mashreq Bank PSC, Samba Capital and Warba Bank were also appointed as joint bookrunners on the transaction.

The proceeds from the Sukuk, according to ACC, will be channelled to general corporate purposes, including to refinance existing debt. “Sukuk Certificates may be subject to early redemption at the option of the Company upon the occurrence of a tax event. Sukuk Certificates may also be redeemed early upon the occurrence of a total loss event, an asset disposition event or a dissolution event. A change of control put option and a Company call option also apply to the Sukuk Certificates,” said the company in its Tadawul filing.

The Sukuk Certificates have been assigned a rating of Ba2 by Moody’s and are expected to be assigned a rating of BB+ by Fitch.

ACC has also raised new bank financing in November – see separate news story.

ACC currently operates 19 malls in 10 Saudi cities including the Mall of Arabia and Nakheel Mall.

 

Malaysian Mortgage Corporation (Cagamas) Raises RM805m Through Two Sukuk Offerings in November 2019

Kuala Lumpur – Cagamas Berhad, the National Mortgage Corporation of Malaysia, one of the most prolific issuers of Sukuk, continues to play a major role in Sukuk issuance and in the Islamic mortgage securitization market in Malaysia. On 22 November 2019, Cagamas closed combined unsecured issuances totalling RM705 million (US$ 169.2 million)– comprising RM100 million multi-tenured 1-year and 1.5-year Conventional Medium Term Notes (CMTNs), RM300 million 3-month Conventional Commercial Papers (CCPs) and RM305 million 3-month Islamic Commercial Papers (ICPs).

Proceeds from the issuances, according to the Corporation, will be used to fund the purchase of housing loans and Islamic home financing from the domestic financial system.

“The conclusion of the deal was part of the Company’s on-going initiatives and continued commitment in promoting secondary liquidity in the domestic market. Positive market sentiments arising from Bank Negara Malaysia’s recent announcement of a cut in its Statutory Reserve Requirement from 3.50% to 3.00% have resulted in the pricing of Cagamas’ combined issuances of RM300 million 3-month CCP and RM305 million 3-month ICP at a competitive pricing level of 3 bps below the corresponding 3 months Kuala Lumpur Interbank Offered Rate (KLIBOR) benchmark rate or equivalent to 3.34 on pricing date,” explained Datuk Chung Chee Leong, President/Chief Executive Officer of Cagamas.

Cagamas also issued on 28 November multi-tenored RM500 million (US$ 120 million) Islamic Medium Term Notes (IMTNs), comprising RM20 million 1-year IMTNs, RM30 million 3-year IMTNs and RM450 million 5-year IMTNs. The issuance proceeds will be used to fund the purchase of Islamic home financings from the financial system.

“We are pleased with the successful conclusion of the Company’s 23rd issuance exercise for this year which brings the total issuances for YTD 2019 to RM7.9 billion. The issuance was out of the Company’s RM40 billion Conventional Medium Term Notes (CMTNs)/Islamic Medium Term Notes (IMTNs) local currency programme. The issuance, that was concluded via public offering drew commendable participation from a diversified group of investors including sovereign wealth funds, financial institutions, insurance companies, as well as foreign asset managers. The Company’s IMTNs were priced competitively at final profit rate of between 26 to 29 basis points (bps) over Malaysian Government Investment Issues (MGII), 5 to 8 bps above government-guaranteed (GG) sukuk and 1 to 9 bps below AAA-rated corporate sukuk yield of equivalent tenure,” added Datuk Chung.

Cagamas’ corporate bonds and Sukuk continue to be assigned the highest ratings of AAA and P1 by RAM Rating Services Berhad and AAA/AAAIS and MARC-1/MARC-1IS by Malaysian Rating Corporation Berhad, denoting its strong credit quality.  Cagamas is also well regarded internationally and has been assigned local and foreign currency long-term issuer ratings of A3 by Moody’s Investors Service Inc. that are in line with Malaysian sovereign ratings.

Albaraka Turk Raises TL400 million Through Sukuk Ijara Offering in November 2019

Istanbul – Leading Turkish Participation bank, Albaraka Turk Katilim Bankasi, a subsidiary of the Bahrain-incorporated but Saudi-owned Albaraka Banking Group, raised TL400 million through an Ijara (Lease Certificate) Sukuk issuance in November 2019.

Albaraka Turk executes regular Turkish Lira Lease Certificate Issuances in the domestic market. “With the help of these issuances, we aim to contribute to the development of Islamic Capital Market in Turkey as well as enhance our investor base,” said Malek K. Temsah, Albaraka Turk’s Assistant General Manager of Treasury, Investment Banking, and Financial Institutions.

In October, Albaraka Turk raised TL950 million in two Ijara (Lease Certificate) Sukuk issuances. The Sukuk, like the previous ones, were issued through its subsidiary Bereket Varlik Kiralama AS.

IILM Re-issues US$1.06bn Sukuk in Two Tranches in November 2019

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) successfully re-issued A-1 short-term Sukuk totaling US$1,060 million in two transactions in November 2019 in various series and tenors, respectively. On 6 November, IILM reissued A-1 short-term Sukuk amounting to US$600 million in two series with 1-month and 3-month tenors. The reissuance comprised:

  1. US$300 million with a 1-month tenor at a profit rate of 1.85%; and
  2. US$300 million with a 3-month tenor at a profit rate of 1.91%.

According to the IILM, the reissuance was well supported with demand for the 1-month and 3-month Sukuk series reached bid-to-cover ratio of 208% and 255% respectively.

“The profit rates achieved are 1.85% for the 1-month, compared to the indicative pricing guidance range of 1.86%-1.92%; and 1.91% for the 3-month, compared to the indicative pricing guidance range of 1.92%-1.98%,” the IILM said in a statement.

Purchases by Islamic Primary Dealers (PDs) in the primary auction amounted to 60%, 67% for the 1-month and 3-month Sukuk respectively.

In terms of geographical distribution, the allocation of GCC-based PDs stood at 39% and 67% for the 1-month and 3-month Sukuk respectively. Asia-based PDs were respectively allocated 33% and 33% of the 1-month and 3-month Sukuk. The PDs based in other jurisdictions were awarded 28% on the IILM 1-month Sukuk and nil for the 3-month Sukuk.

On 27 November 2019, the IILM reissued US$460 million A-1 short-term Sukuk with 4-month tenor for the first time since 2017 priced at a profit rate of 1.92%.

According to the Corporation, the IILM Sukuk curve saw a new tenor offered this year. A 4-month Sukuk has been issued in a second auction in the month of November 2019, and it complements the IILM curve starting from 2-week to 6-month Sukuk offered in 2019.

The demand for the Sukuk series reached a bid-to-cover ratio of 179% with an order book of US$825 million. The IILM 4-month Sukuk was priced at 1.92% under the competitive auction methodology, compared to the indicative pricing guidance range of 1.93%-1.99%. Purchases by Islamic Primary Dealers (PDs) in the primary auction amounted to 91% of the total amount issued.

In terms of geographical distribution, the allocation of the 4-month IILM Sukuk was distributed across the GCC (56%) and Asia ( 44%).

The IILM has issued a total amount of circa US$8.6 billion through 28 Sukuk year-to-date, offering 7 tenors from 2-weeks up to 6-months.

According to the IILM, the primary dealers that participated in the three auctions conducted under the competitive bidding of the Bloomberg AUPD Platform included Abu Dhabi Islamic Bank; Al Baraka Turk Participation Bank; Barwa Bank; Boubyan Bank; CIMB Islamic Bank Berhad; First Abu Dhabi Bank; Kuwait Finance House; Macquarie Bank; Maybank Islamic Berhad; Qatar Islamic Bank; and Standard Chartered Bank.

ACC Signs US$1.4bn Ijara and Murabaha Facilities With International Consortium of Banks

Jeddah – Saudi mall operator Arabian Centres Company (ACC) signed in November a term Ijara facility and term and revolving Murabaha facility with a total value of US$1.4 billion (or its Saudi riyal equivalent) with a syndicate of banks.

In a disclosure to Tadawul (the Saudi stock exchange), the company explained that the Ijara facility comprises two tranches – one with a tenor of 8 years and the other with a 12-Year tenor. The Murabaha facility comprises a Revolving Murabaha facility with a tenor of 3 years (subject to two one-year extension options), and a Term Murabaha tranche with a tenor of 12 years.

Samba Financial Group acted as Global Agent; Goldman Sachs International, Samba Financial Group, the Saudi British Bank, Abu Dhabi Commercial Bank, National Commercial Bank, Arab National Bank, Al Rajhi Banking and Investment Corporation, Mashreq Al Islami, Islamic Banking Division of Mashreqbank Psc as Book Runners and Mandated Lead Arrangers; Samba Financial Group as Ijara Investment Agent and as Murabaha Investment Agent. All the above institutions were participants in the financing facilities.

According to ACC, guarantees provided for Credit Facility included promissory notes and title to the assets being used for the Ijara facility (with certain of these assets benefitting all facilities).

In addition, the Company will be creating a pledge over certain moveable assets and a mortgage over certain immovable properties in favour of the financiers. The proceeds from the Ijara facilities will be used to repay existing debt facilities; the payment of fees, costs and expenses incurred in connection with the facilities; and towards funding of general corporate purposes of the Group.

The proceeds from the term Murabaha facility and a revolving Murabaha facility will similarly be used to fund general corporate and working capital requirements.

Saudi Telecoms Giant Mobily Signs SR3bn Islamic Credit Facility with Alinma Bank   

Riyadh – Saudi telecoms giant, Etihad Etisalat Co. (Mobily), signed a SR3 billion unsecured 10-Year Islamic credit facility with Alinma Bank on 19 November 2019. In a filing with Tadawul, Mobily said that the proceeds from the facility will be used to “replace existing financing facilities, and for general corporate purposes including capital expenditure.”

This financing, added Mobily, is “part of the company’s management efforts to improve liquidity, reduce the cost of finance and improve terms and conditions. It also provides the company with additional credit flexibly. The success of this transaction reflects the continuous improvement of the company credit rating and confirms the trust the lenders have in Mobily’s capabilities and the recognition of its achievements.”

Turkish Treasury Issues TL1.7bn Sukuk Ijara (Lease Certificates) in November

Ankara – The Turkish Ministry of Finance & Treasury continued its regular issuance of domestic sovereign Sukuk Ijara (lease certificates) in November raising TL1.7214 billion in the process.  In a statement the Treasury confirmed that CPI Indexed Lease Certificates has been issued with the value date of 6 November 2019 and a maturity date of 30 October 2024.

The issuance was under the direct sale method and distributed by the Central Bank of Turkey (CBT) via the AS (Auction System under the CBT Payment Systems) on 5 November. The issuance has a periodic real rental rate of 1.63% over 6 months.

The Treasury issues their lease certificates “in order to increase the domestic savings, broaden the investor base and diversify the Government’s borrowing instruments.”

Saudi Corporate Raises SR330.9m of Islamic Credit Facilities to Finance Balance Sheet Activities and Debt Refinancing

Jeddah – Saudi Company for Hardware (SACO) signed a SR330.907 million Islamic banking facility agreement with the Saudi British Bank (SABB) on 13 November. The facility, said SACO in a disclosure to Tadawul, has a tenor of seven years including a two-year grace period effective from 14 November 2019.

The facility is guaranteed by a promissory note amounting to the value of the financing. Proceeds from the facility will be used to finance working capital and capital expenditure requirements.

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