Malaysia Building to launch up to RM 3 billion sukuk program with subsidiary's sukuk as backup

By Marisa Wong

Madison, Wis., Oct. 29 - Malaysia Building Society Bhd. made an announcement on Tuesday clarifying that its wholly owned subsidiary Jana Kapital Sdn. Bhd.'s proposed 16-year sukuk program is meant to facilitate issuances under its own proposed sukuk program and is not an independent issuance program.

According to a Bursa Malaysia announcement on Monday, Malaysia Building is looking to establish a 15-year structured covered sukuk program of up to RM 3 billion, and its subsidiary plans to set up a RM 4 billion sukuk program.

The company explained that it plans to issue structured covered sukuk in tranches from time to time, with each tranche backed by financing receivables held by Jana Kapital.

As part of the transaction structure of Malaysia Building's sukuk program, proceeds from the structured covered sukuk will be used to subscribe for sukuk issued under Jana Kapital's program.

Jana Kapital will then use proceeds to purchase financing receivables from its parent company.

Malaysia Building will in turn use the receivables proceeds to fund its working capital needs.

In other words, funds will only be raised through Malaysia Building's sukuk program and not through Jana Kapital's sukuk program.

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