UOB establishes RM5 bil Islamic debt programme in Malaysia

The bank has also successfully priced its debut Islamic debt.

UOB’s Malaysian subsidiary, UOB Malaysia, has established its inaugural Islamic debt programme on Jan 25. The programme will allow up to RM5 billion ($1.42 billion) to be raised in Malaysia under the Shariah principle of Wakalah Bi Al-Istithmar.

The bank has also successfully priced its debut Islamic debt, which is a RM500 million Basel III-compliant Tier 2 subordinated Islamic medium term note or Tier 2 Sukuk Wakalah. The note, which received an AA1 rating by RAM Rating Services, is due in February 2034 and callable in February 2029.

The debt offering was oversubscribed by some 3.39 times by a diverse group of investors including fund managers and insurance companies.

The final order book of RM1.7 billion enabled UOB Malaysia to close at a fixed profit rate of 4.01 per cent per annum, 45 basis points (bps) above the benchmark Malaysian Government Securities (MGS). The offering is also said to be the tightest spread ever recorded for a Tier 2 capital instrument in the Ringgit-denominated market.

“We are pleased that our maiden Sukuk offering was very well received by the market. The oversubscription and the tight pricing achieved reflects investors’ confidence in UOB Malaysia’s solid financial position. The strong demand is also a testament to the liquidity in the local debt capital market and its robustness in supporting local corporates’ financing needs,” says Ng Wei Wei, CEO of UOB Malaysia.

The notes are scheduled to be issued on Feb 8 and are intended to qualify as UOB Malaysia’s Tier 2 capital on a consolidated basis.

CIMB Investment Bank and UOB Malaysia acted as joint principal advisers, joint lead arrangers and joint lead managers for this transaction.

As at 11.20am, shares in UOB are trading 23 cents higher or 0.82% up at $28.13.

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