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The Certificates, issued by Malaysia Global Sukuk Inc. (MGS), is the third Syariah-compliant financial instrument to be listed on LFX after First Global Sukuk Inc.'s issues of USD150 million Serial Islamic Lease Sukuk in 2 tranches in January 2002. The listing of the Certificates today, brings the total number of listings on LFX to nine.
This listing further proves LFX's diversity in listing a comprehensive range of multi-currency financial instruments based on both conventional and Syariah principles.
"Listing of the MGS Certificates is testimony to LFX's success in tapping into the growing Islamic financial market while promoting itself as the region's premier offshore exchange," said LFX Chairman, Dato' Mohd Azlan Hashim. He expects that this would serve as a precursor to the listing of other Syariah-compliant instruments on LFX and the development of the Islamic financial market.
MGS is a Labuan incorporated Special Purpose Vehicle (SPV) owned by The Minister of Finance, a body corporate established under the Ministry of Finance (Incorporation) Act 1957 of Malaysia.
The certificates which are due in 2007, had their primary listing on the Luxembourg Stock Exchange on 23 August 2002 and are internationally rated with a Moody's rating of Baa2 (positive) and Standard & Poor's according it a BBB (positive).
"The overwhelming response to the Certificates by both conventional and the Middle East investors indicates the increasing demand in Syariah-compliant financial instruments. This should encourage other issuers to come up with more well-structured Syariah-compliant instruments," said the Director-General of Labuan Offshore Financial Services Authority (LOFSA), Encik Noorazman A. Aziz.
The proceeds of the issue are being used to finance the purchase of beneficial title to four (4) parcels land located in and around Kuala Lumpur. MGS will then lease the parcels of land to the Government of Malaysia under a lease (Ijarah) agreement with semi-annual rental payments for a period of five (5) years. The rental payments will then be used to meet the periodic distribution due on the Certificates. The lease agreement commenced on 3 July 2002 up to the scheduled dissolution date of July 2007. The Government of Malaysia undertakes to re-acquire the land at the end of the tenure.
The Certificates have been certified compatible with the principles of Syariah by the HSBC Syariah Supervisory Committee. HSBC was the sole lead manager and sole bookrunner for this issue while HSBC Amanah Finance, Dubai was the transaction adviser for the issue.
In addition, the Certificates is the first product to be endorsed by the Syaria Supervisory Committee of the International Islamic Financial Market (IIFM), which is based in Bahrain.
IIFM was established on 1 April 2002 as a result of a joint effort between central banks/monetary agency of Bahrain, Brunei Darussalam, Indonesia, Malaysia, Sudan, and the Islamic Development Bank, Jeddah, with the aim of creating an environment that will encourage active trading of shariah compatible instruments among Muslim countries and among both Islamic and non-Islamic financial institutions.
The listing sponsor for the secondary listing of the Certificates is AmInternational (L) Ltd., a member of the AmBank Group. As a sponsor, AMInternational (L) Ltd. is responsible not only for the listing but in ensuring that MGS complies with the post-listing obligations as prescribed by LFX's rules and regulations.
As a web-based exchange, LFX offers market participants and investors around the world, fast and efficient access to its services. With today's listing, LFX's range of financial instruments listed comprise three Syariah-compliant certificates (sukuk), five open-ended funds and one conventional floating rate secured notes.
Wholly owned by the Kuala Lumpur Stock Exchange, LFX is an international offshore financial exchange that facilitates the listing of a multitude of multi-currency instruments and allows the issuer the flexibility to structure the instruments that best suit their funding needs.
