Danajamin issues inaugural Tier-2 subordinated sukuk under capital management plan

PETALING JAYA: Financial guarantee insurer Danajamin Nasional Bhd has issued its inaugural Tier-2 subordinated sukuk as part of its capital management plan.
The subordinated sukuk issuance of RM500 million is part of a sukuk programme of up to RM2 billion for the issuance of senior and subordinated sukuk murabahah.
The subordinated sukuk will have a tenure of 10 years, with a callable option made available from year five onwards and is rated AA1 by RAM Rating Services Bhd and AA+ by Malaysian Rating Corp Bhd.
 
The subordinated sukuk, which will be redeemed at its full nominal value upon maturity, is subordinated, unsecured obligations of the company, ranking pari passu with any other existing subordinated, unsecured obligations of the company.
“We have put in place a comprehensive capital management plan as part of regulatory requirement. This sukuk programme provides an alternative to the company in sourcing for additional capital. This will also increase the ability of Danajamin in meeting its developmental mandate of bringing new and viable companies into the debt capital market,” Danajamin CEO Mohamed Nazri Omar said in a statement today.
According to Danajamin, the inaugural issuance was oversubscribed, receiving overwhelming response of about RM800 million from a diverse range of investors achieving a yield of 4.80%. 
As a result, the issuance was upsized from the initial size of RM300 million to RM500 million of which RM400 million is offered to investors and RM100 million via private placement.
 
“We are indeed very pleased to receive encouraging support by a wide range of investors that includes asset managers, financial institutions, pension funds and insurance companies. This reflects the market confidence in Danajamin. We were able to attract a total of 16 investors to participate in this inaugural issuance,” said Mohamed Nazri.
 
The issuance also sees Danajamin strengthening its regulatory capital level enabling it to continue meeting its developmental mandate to stimulate the bond/sukuk market. 
The joint principal advisers and joint lead arrangers are AmInvestment Bank Bhd and Maybank Investment Bank Bhd while the joint lead managers for the first issuance are AmInvestment Bank Bhd, Maybank Investment Bank Bhd and Hong Leong Investment Bank Bhd.
 
Since its establishment in 2009, Danajamin has guaranteed both conventional and Islamic bond/sukuk programmes issued by 31 viable Malaysian corporations across various sectors. To date Danajamin has brought about a market impact of about RM16 billion.