khazanah nasional exchangeable sukuks or rafflesia capital exchangeable trust certificates...
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Khazanah Nasional Exchangeable SukuksorRafflesia Capital Exchangeable Trust Certificates (Exchangeable Sukuks)
In 2006, Khazanah Nasional Berhad (the Malaysian Governments investment arm) issued the worlds first Shariah-compliant exchangeable bond
Largest exchangeable instrument issued out of Asia ex Japan in the year 2006 to date
Largest ever exchangeable bond out of Malaysia at that time
USD750 million Sukuk exchangeable into ordinary shares of RM1.00 each of Telekom Malaysia
Listed on Labuan International Financial Exhange and Hong Kong Stock Exchange
Certificates immediately traded up after pricing
One of the 3 Islamic exchangeable bonds issued by Khazanah Nasional to date (2009)
Unique & Innovative because : 1. First Sukuk structure to be backed by Shariah compliant financial assets (equities of Telekom Malaysia Bhd) 2. Mechanism of payment of coupons on the Sukuk : Periodic sukuk coupon payment is not guaranteed and had to be paid from the dividend income derived from the equities of Telekom Malaysia 3. Uncertainties of coupon payments are addressed by creation of sinking fund account for the benefit of the investors, wherein the dividends were accumulated to ensure availability of funds to make payment throughout the life of the transaction.Details
Islamic structure for Khazanahs Islamic Exchangeable Bonds i.Two special purpose companies, Rafflesia Capital Ltd. (Rafflesia) (the Issuer) and Orchid Capital Ltd. (Orchid) will be held in trust for the benefit of charities to be nominated by Khazanah.ii.Khazanah will sell the Exchange Property, comprising the beneficial ownership of Shariah- compliant assets, i.e. shares to Orchird, which in turn sells the beneficial ownership in the shares to Rafflesia.iii.Khazanah will retain the voting rights attached to TM shares. Rafflesia has the beneficial interest over TM shares which it holds in trust for the Sukuk holders.iv.The Issuer then issues the Exchangeable Trust Certificates which evidence the beneficial ownership interests of Sukuk holders in the shares.v.Expected fixed periodic payments will be provided in cash out of the dividends paid out by the shares.
Periodic Payment Exchangeable Trust Certificates - Ongoing
Periodic Payment Exchangeable Trust Certificates - Maturity
**Conversion of TM sharesThe underlying financing assets (Telekom Msia equities) were changed to the shares TM and Axiata respectively due to the restructuring done at Telekom Msia Bhd level in year 2008. Please refer to the next slide for the criteria.
Apart from the above, there are also 2 other items that are in place : In event of the above are breach : failed financial ratio tests OR delisted from Shariah Approved List of SC; there is a put option in place for early redemption of the sukuk Dividends that have interest income need to be stripped off purification of dividendShariah Compliance
Comparison between Islamic & Conventional Exchangeable Bonds
Khazanah Exchangeable Sukuk #2Khazanah Exchangeable Sukuk #1Khazanah Exchangeable Sukuk #3
List of Awards Won