DEAL: first Malaysian sukuk to monetise real estate project billings

Author: Olly Jackson | Published: 26 Jan 2018

Ahead of the curve A Malaysian company has issued the first sukuk backed by future payments made on real estate projects

SkyWorld has issued Malaysia's first sukuk which monetises progress billings, securitising future payments received from the sale of yet-to-be completed units in a mixed development project located in Kuala Lumpur.

The MYR1 billion ($250 million) Islamic bond, issued in December, will be used to fund the property developer's ongoing projects. It was structured using MYR600 million Islamic medium-term notes under a sukuk musharakah programme and MYR400 million notes under a sukuk murabahah programme.

Cash flows

The transaction has been structured to mitigate the construction and liquidity risks associated with real estate development projects by placing progress billings upfront.

Charanjeev Singh, a partner at corporate finance advisory NewParadigm, who advised on the issuance, said that the structure provides more efficient project management cash flows.

"The primary objective of this programme...