New Australian venture to promote Malaysian alternative bond market
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SmartSukuk, a newly established Australian venture, will act as a conduit for Australian issuers to facilitate corporate bond issuance in the Malaysian capital market. Australian issuers should be paying greater attention to the Malaysian bond market given how vibrant it has become overtime since the implementation of its capital market masterplan (now in its second instalment) with particular focus on Sukuk issuance (an alternative bond instrument).
Malaysia accounts for approximately 70% of the global Sukuk issuance and even attracts issuers from the MENA region. There is a strong demand by investors for the alternative bond instruments and this sometimes translates in an oversubscription of the offer, for example the Cagamas, Axiata and the DanaInfra offers (to name a few). “Sovereign, quasi-sovereign and corporate issuers constantly fare well with their Sukuk issuance in Malaysia and this led us to further explore this avenue,” says Yanese Chellapen.
SmartSukuk has teamed up with Malaysian counterparts to provide a turnkey process for a Sukuk offer. “This gives issuers access to the product and process expertise with on the ground presence in Malaysia to execute their capital raising,” Yanese Chellapen mentions. SmartSukuk will be looking at issuers with an investment grade credit rating looking at raising significant amount of capital.
There has been a buzz in the Australian marketplace for some years now but various impediments, mainly tax, have prevented any Sukuk issuance thus far. However, there are scenarios that would not necessarily be ‘inhibited’ by such impediments and these are currently being overlooked. For instance, Australian corporates with overseas assets can effectively remove the Australian impediments out of the equation if they are looking at funding these operations.
SmartSukuk is also turning its attention to Hong Kong with legislative changes expected to be in place in the first quarter of next year to facilitate Sukuk issuance. “While we don’t expect a rush to using Sukuk in Hong Kong, we nevertheless see there is an opportunity and have started deploying human capital in Hong Kong to maintain our finger on the pulse,” says Yanese Chellapen.
Malaysia accounts for approximately 70% of the global Sukuk issuance and even attracts issuers from the MENA region. There is a strong demand by investors for the alternative bond instruments and this sometimes translates in an oversubscription of the offer, for example the Cagamas, Axiata and the DanaInfra offers (to name a few). “Sovereign, quasi-sovereign and corporate issuers constantly fare well with their Sukuk issuance in Malaysia and this led us to further explore this avenue,” says Yanese Chellapen.
SmartSukuk has teamed up with Malaysian counterparts to provide a turnkey process for a Sukuk offer. “This gives issuers access to the product and process expertise with on the ground presence in Malaysia to execute their capital raising,” Yanese Chellapen mentions. SmartSukuk will be looking at issuers with an investment grade credit rating looking at raising significant amount of capital.
There has been a buzz in the Australian marketplace for some years now but various impediments, mainly tax, have prevented any Sukuk issuance thus far. However, there are scenarios that would not necessarily be ‘inhibited’ by such impediments and these are currently being overlooked. For instance, Australian corporates with overseas assets can effectively remove the Australian impediments out of the equation if they are looking at funding these operations.
SmartSukuk is also turning its attention to Hong Kong with legislative changes expected to be in place in the first quarter of next year to facilitate Sukuk issuance. “While we don’t expect a rush to using Sukuk in Hong Kong, we nevertheless see there is an opportunity and have started deploying human capital in Hong Kong to maintain our finger on the pulse,” says Yanese Chellapen.
About SmartSukuk
SmartSukuk is a special purpose venture set-up to facilitate capital (sukuk) raising in Malaysia.