Syarikat Takaful Malaysia Keluarga Bhd (Takaful Malaysia) has proposed the establishment of a Tier 2 subordinated sukuk programme of up to RM1 billion in nominal value based on the shariah principle of wakalah bi al-istithmar.

The company said in a filing with Bursa Malaysia today that the programme, known as the sukuk wakalah programme, will be used to issue Tier 2 subordinated sukuk with a tenure of not less than five years from the issue date.

“The Tier 2 sukuk wakalah issued under the sukuk wakalah programme is intended to qualify as Tier 2 capital of Takaful Malaysia under the Risk-Based Capital Framework for Takaful Operators issued by Bank Negara Malaysia on Dec 17, 2018,” it said, adding that the framework may be further amended, revised or substituted from time to time.

Takaful Malaysia said it lodged the required information and relevant documents today with the Securities Commission Malaysia (SC) pursuant to the regulator’s guidelines on unlisted capital market products under the Lodge and Launch Framework.

The company said it has been accorded a takaful financial strength rating of AA2 by RAM Rating Services Bhd, while the sukuk programme has been given a credit rating of AA3.

“The proceeds from the Tier 2 sukuk wakalah will be used for the company’s working capital, corporate purposes and to refinance the Tier 2 sukuk wakalah or other shariah-compliant capital instruments.

“For the avoidance of doubt, utilisation of proceeds shall at all times be for shariah-compliant purposes,” it said.

CIMB Investment Bank Bhd is the sole principal adviser, sole lead arranger and sole lead manager for the sukuk wakalah programme, while CIMB Islamic Bank Bhd is the shariah adviser.