(Reuters) A debut Singapore dollar sukuk from offshore marine services company Swiber has introduced a new group of Islamic investors to the city’s capital markets.
Almost half of the 150 million Singapore dollar ($118 million) deal went to investors from the small oil-rich state of Brunei, helping Swiber clinch pricing that was more competitive than conventional debt.
Brunei buyers have participated in Singapore’s nascent Islamic bond market before, but their dominance of Swiber’s order book will be welcome news for Singaporean companies that are looking to sell Islamic debt in the local market, such as Mustafa Group and Sabana REIT.
“The latest deal is another piece of clear evidence that Islamic sukuk generates more competitive yields than conventional debt,” said one debt syndicate banker.
Swiber’s five-year deal priced last week to yield 6.5 percent and was backed by strong anchor demand from high-quality institutional investors before books opened.
About half of the bonds were allocated to Islamic institutions. The biggest chunk, 46.3 percent, went to Brunei, while Malaysia took 10.0 percent and Singapore 43.7 percent.
Institutional buyers, including takaful funds, pension funds and banks, accounted for a huge 96.5 percent share of the deal. Fund managers took a meagre 0.7 percent while private banks took 2.8 percent.
The small share of fund managers and PBs reflected the tight pricing on the new issue. Given the already strong anchor interest from the start, Swiber was in a position to withstand any pushback from other investors.
At a yield of 6.5 percent, pricing was in line with guidance and inside Swiber’s outstanding conventional paper, with its 7.125 percent 2017s quoted at 6.58 percent.
That suggests Singapore dollar sukuk can now command more competitive pricing than conventional bonds.
“Sukuk deals are gaining traction in Singapore,” the banker added. “Swiber is only the second Singapore corporate to sell Islamic bonds in this market but it benefited from City Development’s regular sukuk issuance, and Khazanah Nasional’s S$1.5 billion sukuk issue in 2010. There were also Singapore companies crossing into Malaysia to sell Islamic bonds, all of which have built up demand for sukuk from Singapore companies.”
Bankers had also indicated peer Ezra’s 4.875 percent 2018 conventional bonds at 5.24 percent, showing the new sukuk yielded a concession of about 125 basis points.
Rival bankers credited the borrower with achieving a good result and garnering an impressive benchmark issue size for the local market.
The deal also got a boost from a positive announcement by Swiber that it had clinched new contracts worth about $435 million, boosting a strong order backlog that stood at about $1.1 billion as of May 2013.
DBS and Maybank Kim Eng were joint leads in the deal, issued via Swiber Capital with Swiber Holdings acting as obligor. The notes were to be issued on Aug. 2 at par off a newly established $500 million multicurrency Islamic trust certificates issuance programme, which was announced on the Singapore Stock Exchange.
Maybank Kim Eng was sole lead arranger and global coordinator for the programme. Maybank Kim Eng and its parent company Maybank were joint programme dealers with Maybank Islamic as the sharia adviser for the programme. The sukuk is based on the wakalah bi al-istithmar principle.
Proceeds from the issue will be used to refinance debt and support capital expenditure, for working capital and general corporate purposes which are sharia-compliant.
March 22 (Reuters) – The Biden administration on Friday released new rules that will make it easier for offshore wind developers to claim a subsidy for facilities planned in areas that have historically relied...
By Lars Paulsson (Bloomberg) — On the outskirts of Rotterdam, a bright orange ship is hoisted above the muddy Rhine with the help of six chunky triangular legs. The vessel has just been retrofit with a huge...
The Biden Administration has announced plans for a second offshore wind lease sale in the Gulf of Mexico after a first sale which, despite its historic significance, earned only a...
March 20, 2024
Total Views: 577
Why Join the gCaptain Club?
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.