IslamicFinance.de

The Federation of Malaysia returned to the international bond markets on Wednesday with a $1.5 billion wakala sukuk. However, this success is overshadowed by 1MDB's $11 billion debt after one of its guarantors failed to make a $50 million interest payment on a $1.75 billion note that matures in 2022. It has now entered a grace period, which ends on April 25.

The Republic of Indonesia begins global roadshows on Thursday for a new global sukuk deal, its first benchmark borrowing of the year in the offshore markets. The prospective Reg S/144a transaction is being led by CIMB, Citi, Deutsche Bank, Dubai Islamic Bank and Standard Chartered. A few weeks ahead of the roadshow, Robert Pakpahan, Indonesia's director general of budget financing and risk management, spoke about the sovereign's funding plans for the year. Pakpahan says he hopes declining oil prices and shrinking investment funds from the Middle East will not affect the pricing prospects for the new deal.

Hong Kong recently issued $1 billion five-year sukuk. Pricing was aggressive, with the $1 billion sukuk pricing at Treasuries plus 35bp. The sharia-compliant note had a profit rate of 1.894%. However, the leads took comfort in the fact that there were solid anchor orders in place before launching the deal. Roadshows were held in key Islamic centres including Kuala Lumpur, Saudi Arabia, the Emirates and London and much of those orders came from reverse enquiries from roadshows. The sukuk gathered an orderbook of $2 billion from 49 accounts. Given that it was an ultra-low yielding AAA product, banks treasuries took close to three quarters of the deal. Central banks and sovereign wealth funds took close to a quarter of the deal.