Commentary by RHB Global Sukuk Markets Research, Kuala Lumpur, Malaysia

Malaysia Set to Issue New Sukuk; Turkish Banking Outlook Remained

Negative; ICD Priced USD300m 5y at 2.468%

Bloomberg Malaysia Sukuk Ex-MYR Total Return (BMSXMTR) and Dow Jones Sukuk Total Return (DJSUKTXR) indices closed higher

Closing at 103.3 (+0.11%) and 158.3 (+0.13%) respectively, with yields declining 0.9bps to 2.486%. Gainers were led by Qatar ’23, PETMK ’20 and MALAYS ’25. Markets remained cautious ahead of first-quarter corporate earnings season and oil producers meeting on 17 April in Doha.

Oil prices jumped 8.5% to USD41.94/bbl on unexpected decline in US crude inventories and revived hope that major key producers may agree to curb their oil production after Kuwait expressed confidence about the deal, while dismissing the importance of Iran in the deal.

ICD Sukuk

Islamic Corporation for the Development of the Private Sector (ICD) via Hilal Services (Aa3/AA/AA) priced USD300m 5y Senior Sukuk at 2.468% (see sovereign/corporate update).

Meanwhile, the outlook for Turkey’s banking system on negative for the third consecutive year by Moody’s, owing to the system’s reliance on external wholesale markets which will expose to weaker international investor confidence and higher funding costs.

Banks also face pressures from increasing dollarisation of liabilities in light of lira’s depreciation.

MYR Space

In the MYR space, the MYR3.5bn 7y GII (reopening) auction closed at average yield of 3.932% (vs. WI of 3.935/915% a day prior to the tender closed), with strong BTC ratio of 2.686x.

Putrajaya Holdings (MARC: AAA) priced MYR535bn Sukuk al-Musyarakah in 3 tranches — MYR55m 6y at 4.20%, MYR250m 8y at 4.35% and MYR230m 9y at 4.40%.