Axiatas establishment of a multi-currency sukuk programme and subsequent dim sum sukuk issue marks a new level of flexibility for underlying assets in an individual deal.
The September RMB 1 billion ($158.7 million) issue was the largest RMB-denominated dim sum bond to date. It followed Axiatas, a Malaysian telecommunications company, establishment of a $1.5 billion multi-currency sukuk issuance programme established in August this year. It was Asias first internationally-rated programme of its type.
Deal counsel agreed that the programme afforded the issuer unprecedented flexibility in utilising a broad variety of shariah-complaint within its structure, and could inspire copycat deals.
The inaugural RMB-denominated issue is listed on Bursa Malaysia and the Singapore Stock Exchange. It utilised only airtime vouchers, which represent the issuers ability to use minutes on Axiatas telecommunications networks, as its underlying asset.
Under the programme it is possible to use airtime vouchers, shariah-compliant shares, lease assets and murabahah receivables from the sale of commodities to underlie a particular deal.
Adding to the deals complexity, the documentation provided for various combinations of the assets to be utilised in each issue while also ensuring the programme remained shariah-compliant.
Islamic finance structures can be complicated, but the number of potential assets involved meant that there were complications in structuring the documentation, said Clifford Chance senior associate Gregory Man.
Deal counsel also tackled the difficult question of shariah compliance across regions. Allen & Overy partner Jeremy Stoupas, said the shariah compliance standards in Malaysia are generally regarded as more relaxed than those in the Middle East.
Because the issuer intended to tap investors in various parts of the world, including the Middle East, the programme structure needed to meet shariah requirements across the board. To dispel concerns, Axiata utilised the Central Shariah Committee of HSBC, whose opinions are acceptable to investors in both Malaysia and the Middle East.
More programmes ahead
The establishment of the programme and subsequent issuance may spark a trend, deal counsel said.
Most sukuk issuances out of South East Asia have been done on a standalone basis. But Stoupas commented that the Axiata dim sum sukuk, which was done as a drawdown under a programme, seems like an emerging trend for sukuk offerings.
In these choppy markets, programmes offer issuers more flexibility and can be more cost-effective structures than doing deals on a standalone basis, he added.
Clifford Chance advised joint lead managers Bank of America Merrill Lynch, CIMB and HSBC. Adnan Sundra & Low was Malaysian legal counsel to the joint lead managers. Allen & Overy represented Axiata and ZICOlaw acted as local counsel to the issuer.