Bahrain’s GIB Sets Up 3.5 Bln Ringgit Sukuk Program

Bahrain’s Gulf International Bank has set up a 3.5 billion Malaysian ringgit ($1.11 billion) program for potential sale of Islamic bonds, the company said on Sunday, as the lender seeks to diversify its funding sources.

Standard Chartered and Malaysia’s CIMB Investment Bank are lead arrangers on the medium-term notes program, while GIB Capital is the international coordinator.

“The sukuk program represents a strategic move to tap into the ringgit market in an effort to diversify funding avenues and currencies for the Bank,” Jammaz bin Abdullah Al-Suhaimi, GIB’s chairman said in a statement.

Gulf issuers are increasingly targeting options in Malaysia to diversify funding sources away from dollar financing. National Bank of Abu Dhabi and Abu Dhabi National Energy Co have also issued in ringgit in response to high demand from Malaysian investors looking to gain international exposure in local currency.

The program has been rated AA1 by Malaysian rating agency RAM Ratings, considered a prerequisite to issuing ringgit-denominated bonds.

GIB, which is indirectly 97-percent owned by the Saudi Arabian government, met Malaysian investors in Kuala Lumpur earlier this month to acquaint them with the company.
Chief Executive Officer Yahya Alyahya said a sukuk issue under the program can be expected in the near future when “market conditions are convenient.”

Any eventual sukuk issue will be under a wakala structure, where certificates are issued through a special purpose vehicle which purchases specific assets which are then given to an agent, usually the originator, to manage, Reuters reported.