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
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
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
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
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.