Agrobank Unveils RM1 Billion Sukuk Wakalah Programme
KUALA LUMPUR – Agrobank, a Development Financial Institution (DFI) with a primary focus on strengthening the agriculture sector in Malaysia today unveils its RM1 billion Sukuk Wakalah Programme based on the Islamic principle of Wakalah Bi Al-Istithmar.
Commenting on the launch of its Sukuk offering, Dato’ Mustapha Buang, Chairman of Agrobank said, “We extremely proud to have successfully launched the RM1 billion Sukuk Wakalah Programme. This announcement reaffirms our commitment to Malaysia’s development as a regional Islamic financial centre and demonstrates the depth of the Malaysian Sukuk capital market.
Mustapha further commented, “For the first tranche, Agrobank is looking to issue of RM500 million Sukuk Wakalah. It is our privilege to have embarked on this innovative instrument which we believe will further enhance Malaysia’s position as a global Islamic financial hub and solidify its position as a leader in the global Islamic capital markets. We hope this offering will be well received by a broad range of investors from high quality accounts including government agencies, financial institutions, asset management companies and corporate accounts.”
“Proceeds from the Sukuk issuance will be utilised for the 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 lower cost of medium and long term funding,” he added.
Malaysian Rating Corporation Berhad (MARC) has assigned its financial institution (FI) rating of AAA to Agrobank. Concurrently, the rating agency has assigned a preliminary rating of AAAIS to the bank’s proposed RM1.0 billion Islamic Medium-Term Notes Programme (IMTN programme) and the ratings outlook is stable.
RAM Sustainability Sdn Bhd (RAM Sustainability) has assigned Environmental Benefit (EB) ratings to the Sukuk Programme. Three green solutions within Agrobank’s Sustainable Sukuk Framework (the Framework) – (1) sustainable water and wastewater management; (2) environmentally sustainable management of living natural resources & land use; (3) terrestrial and aquatic biodiversity conservation – have been assigned EB ratings. RAM Sustainability also assigned Social Benefit (SB) ratings to social solutions under the Framework.
The FI rating reflects Agrobank’s status as a wholly government-owned development DFI to which government support has continued to be forthcoming by way of government grants and financing scheme funds at favourable rates as well as placement of deposits from government entities.
The favourable rating accorded to the Sukuk Programme reflects the strong fundamentals of Agrobank and the strategic importance of Agrobank business operations to the Government of Malaysia in view of its role as one of the key enablers in the nation.
For the first tranche of the issuance, Agrobank opts to issue normal senior sukuk. Agrobank may issue Sustainable Sukuk in the future.
The Sole Principal Adviser/Sole Lead Arranger/Sole Lead Manager for this Sukuk programme exercise is Maybank Investment Berhad.
Earlier this afternoon, Agrobank has organised a virtual Group Investor Presentation with Maybank Investment Berhad on the Sukuk Wakalah Programme and its target maiden Sukuk issuance to its potential and interested investors.
