BANK Islam Malaysia has successfully issued its second tranche of 400-million-ringgit (US$92 million) subordinated sukuk murabaha under its 10-billion-ringgit sukuk murabaha programme. Issued on March 26, the offering is the first subordinated sukuk launched by an Islamic bank in Malaysia in 2020.

The sukuk shall qualify as tier 2 regulatory capital of Bank Islam in compliance with Bank Negara Malaysia’s capital adequacy framework for Islamic banks. Hence, it will enhance the capital adequacy of Bank Islam in line with the Basel III requirements.

The sukuk, rated A1/stable by RAM Rating Services, will be redeemed at their full nominal value upon maturity and comes with a call option on its fifth anniversary. The first tranche under the programme was issued on November 7 2018 amounting to 300 million ringgit.

The sukuk murabaha programme was lodged with the Securities Commission Malaysia on September 6 2018. Under the programme, Bank Islam is given the flexibility to issue subordinated sukuk murabaha and/or senior sukuk murabaha during the availability period of the programme.


Bank Islam is also the principal adviser, lead arranger, lead manager and Shariah adviser for the sukuk murabaha programme, the second such programme established by Bank Islam.

Since October 2014, Bank Islam had obtained approvals from Bank Negara and the Securities Commission to establish its first sukuk programme in the form of subordinated sukuk murabaha amounting to one billion ringgit. A total of three tranches were issued under the said programme.

The first tranche amounting to 300 million ringgit was released in April 2015, while the second tranche amounting to 400 million ringgit was issued in December 2015. The third tranche of the programme amounting to 300 million ringgit was issued in November 2017.

Bank Islam is the first Islamic bank in Malaysia and has the widest network of dedicated Islamic banking channels, with more than 144 branches throughout the country.

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