Malaysia’s Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak Launches New Exchange Traded Bonds And Sukuk On Bursa Malaysia

08/01/2013

Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak today marked a historic milestone for the Malaysian capital market with the launch of the Exchange Traded Bonds and Sukuk (ETBS) on Bursa Malaysia Berhad (Bursa Malaysia) with the maiden issuance by DanaInfra Nasional Berhad (DanaInfra), effectively creating a new asset class on the Exchange to cement Malaysia as the world’s leading sukuk marketplace.

ETBS are listed fixed income securities, also known as bonds or sukuk, traded on the stock exchange. This investment offers pre-determined returns in the form of coupons, which are paid out over regular intervals. Investors need only a minimum of RM1,000 as capital to start investing at the initial public offering stage.

Officiating this significant launch the Prime Minister said, “It is important to note that the main objective of the MRT is to ease the burden of the rakyat. This could be achieved through increasing the number of people using public transport, alleviating traffic congestion and reducing travel time from one place to another.

The Prime Minister also stressed that the rakyat have every right to prosper from the country’s development programmes. He said, “So the bonds launched today represent an unprecedented opportunity for the people of Malaysia to invest in, and profit from, the nation’s development.”

At the launch, Tun Mohamed Dzaiddin Hj Abdullah, Chairman, Bursa Malaysia, said, “With the ETBS launch, Bursa Malaysia will be able to provide, not just an additional product, but a unique investment grade instrument to the investment community.”

Dato’ Mat Noor Bin Nawi, Chairman, DanaInfra, said, “DanaInfra was formed to ensure and facilitate the funding of large infrastructure projects undertaken by the Government for the benefit of the general public. Our role is one with great responsibility and we are committed to undertake our role with utmost integrity.

“We are proud to be given the privilege to become the first Issuer and be able to provide the public the opportunity to share in the growth and wealth of the nation with the launch of the country’s debut Exchange Traded Bonds and Sukuk issuance, DanaInfra Retail Sukuk”, continued Dato’ Mat Noor Bin Nawi.

The debut issuance of the ETBS or DanaInfra Retail Sukuk will be used to partly fund the MRT project, giving all investors the opportunity to invest in the nation’s key transport infrastructure and receive a Shariah-compliant return, with the security of a government guarantee of up to RM8 billion.

To further incentivise trading of ETBS on Bursa Malaysia, investors will enjoy non-taxable coupon payments thereby providing better returns on the ETBS. The Government has also approved the utilisation of investors’ EPF Account 1 to direct investment to include ETBS instruments or Government and Government Guaranteed Bonds and Sukuk through authorized agents.

Dato’ Tajuddin Atan, Chief Executive Officer, Bursa Malaysia, said, “The introduction of ETBS complements the exchange's goal to offer a diverse range of tradable products. This first issuance will be the starting point for further growth as it provides an additional, cost-effective method to raise capital as well as provide both domestic and foreign investors price transparency and flexible access to the stability of bonds and sukuks.”

Dato’ Tajuddin also pointed out that Malaysia has an opportunity to be a key driver of the ASEAN marketplace. He said, “Introducing new investment products and asset classes on Bursa Malaysia, such as the ETBS, create a regionally-competitive environment in Malaysia. This is paramount for our capital market as both overseas multinationals operating here and Malaysian companies transitioning into multinationals require a conducive environment to grow.”

After a stellar year for initial public offerings (IPOs) in 2012, all eyes are on Bursa Malaysia to see how the exchange will sustain its momentum in 2013. The launch of the new ETBS asset class, along with several high profile equity offerings indicate that there are solid avenues for growth that Bursa Malaysia is pursuing.

Four participating financial institutions have been appointed by DanaInfra. They are AmBank Group, CIMB Group, Malayan Banking Berhad, and RHB Capital Berhad.