Bank Pertanian Malaysia Bhd (Agrobank) has unveiled its RM1 billion Sukuk Wakalah Programme based on the Islamic principle of Wakalah Bi Al-Istithmar.
Chairman Datuk Mustapha Buang said for the first tranche, Agrobank, a development financial institution (DFI) with a primary focus on strengthening the agriculture sector in Malaysia, is planning to issue up to RM500 million in Sukuk Wakalah.
“Proceeds from the sukuk issuance will be utilised 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 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.
Mustapha believes that this innovative instrument could further enhance Malaysia’s position as a global Islamic financial hub and solidify its position as a leader in the global Islamic capital markets.
Meanwhile, the Malaysian Rating Corp Bhd (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 billion Islamic medium-term notes programme (IMTN programme) and the rating outlook is stable.
In addition, rating agency RAM Sustainability Sdn Bhd has assigned the Environmental Benefit (EB) rating to Agrobank’s sukuk programme.
The bank said the favourable rating accorded to the sukuk programme reflects the strong fundamentals of Agrobank and the strategic importance of its 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 had opted to issue normal senior sukuk and may issue sustainable sukuk in the future, it added.
Maybank Investment Bhd is the sole principal adviser, sole lead arranger and sole lead manager for the sukuk programme exercise.