International Finance
Islamic Finance

Malaysia’s Aeon Credit Service establishes RM2 bn sukuk programme

Aeon Credit sukuk programme
The programme will fund disbursements to customers and refinance existing loans

Aeon Credit Service is establishing a RM2 billion sukuk programme to fund disbursements to customers and refinance existing loans, financing or sukuk, The Star reported. Aeon Credit Service is headquartered in Malaysia. 

The programme is launched under shariah principle of wakalah bi-al istithmar and murabahah through a tawarruq arrangement. It ensures flexibility to offer both senior sukuk and subordinated sukuk from time to time. CIMB Islamic Bank is the Shariah advisor for the programme. 

Aeon Credit told the local media, “The senior sukuk under the programme has been accorded a rating of AA3 (Stable) by RAM Rating Services, while the subordinated sukuk is rated A1 (Stable).” 

According to the company, the subordinated sukuk will be considered as capital in order to meet minimum capital adequacy ratio established by Bank Negara Malaysia.  

CIMB Investment Bank and Hong Leong Investment Bank are the joint principal advisers and joint lead arrangers for the programme. That said, CIMB Investment Bank, Hong Leong Investment Bank and MUFG Bank are the joint lead managers. 

Aeon Credit’s last sukuk issuance in October was a 390 million ringgit sale, marking its biggest since its Islamic commercial papers programme in 2015. 

Last month Malaysia’s bond issuances were expected to exceed RM100 billion this year, as a result of the Islamic finance industry’s good performance. Corporate bond patterns ranging between RM85 billion and RM125 billion over the last five years have strengthened the bond market. Also, the bonds, or sukuk that meet Islamic financing principles are expected to demonstrate resilience this year. 

Corporate bonds have grown in issuance size, on average of 27 percent to $9.27 trillion from $2.92 trillion in 2014. 

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