Malayan Banking Bhd is challenging CIMB Group Holdings Bhd’s nine-year reign as the top arranger in the world’s largest Islamic bond market.
Malaysia’s biggest lender has managed 15.3bn ringgit ($3.5bn) of sukuk offerings in the nation in 2016, data compiled by Bloomberg show. It had a 27% market share versus 22% for CIMB. Maybank last arranged the most such securities 17 years ago. Issuance of Shariah-compliant debt climbed 50% to 60.3bn ringgit this year, after dropping 14% to $56.2bn in 2015, the least since 2011.
Maybank helped manage larger offerings such as those from subway financier DanaInfra Nasional Bhd and power producer Sarawak Hidro Sdn, Michael Oh-Lau, regional head of debt markets, said in an interview in Kuala Lumpur on Friday. Offerings in 2017 will match this year’s levels, driven by refinancing and fundraising for highways, railways and power plants, he said.
“The pipeline is there,” Oh-Lau said. “Demand for Malaysian sukuk will be supported by local institutional funds as they are still flush with cash.”
Maybank, which has total assets of 722.7bn ringgit, is second so far this year to CIMB in global sukuk sales. CIMB said it had led the global table for seven of the past nine years.
“We are seeing stiffer competition in the ringgit sukuk space this year, which bodes well for the Shariah-compliant debt market as a whole,” Mohamad Safri Shahul Hamid, deputy chief executive officer at its Islamic banking unit, said in an e-mailed statement. “CIMB has been active in both ringgit and global fronts and will continue to do so in our efforts to help bridge the demand-supply gap.”
Malaysia, which pioneered Islamic finance more than 30 years ago, held 31% of the $58bn Shariah-compliant assets under management globally at the end of 2015, according to the Securities Commission. Banking assets that comply with Shariah tenets climbed to a record 715.6bn ringgit, or 28% of the nation’s total, as of July 30, a Finance Ministry report shows.
Prime Minister Najib Razak is undertaking a multibillion ringgit programme to transform Malaysia into a developed economy by 2020. DanaInfra issued 9bn ringgit of state-backed Islamic debt via two offerings, while Sarawak Hidro sold 5.5bn ringgit of sukuk without a government guarantee, part of a drive to ease the nation’s fiscal liabilities. The power producer’s 2026 debt last yielded 4.31% on October 27, 12 basis points lower than its coupon rate of 4.43%.
CIMB expects the global sukuk market to remain buoyant with sustained deal pipelines in the near-to-medium term and the ringgit Islamic debt to continue to dominate primary issuance in 2017, Mohamad Safri said.
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