Khazanah Nasional
Exchangeable Sukuks
or
Rafflesia Capital Exchangeable
Trust Certificates (Exchangeable
Sukuks)
Details
• In 2006, Khazanah Nasional Berhad (the Malaysian Government’s investment arm)
issued the world’s first Shariah-compliant exchangeable bond
• Largest exchangeable instrument issued out of Asia ex Japan in the year 2006 to date
• Largest ever exchangeable bond out of Malaysia at that time
• USD750 million Sukuk exchangeable into ordinary shares of RM1.00 each of Telekom
Malaysia
• Listed on Labuan International Financial Exhange and Hong Kong Stock Exchange
• Certificates immediately traded up after pricing
• One of the 3 Islamic exchangeable bonds issued by Khazanah Nasional to date (2009)
• Unique & Innovative because :
1. First Sukuk structure to be backed by Sharia’h compliant financial assets (equities of
Telekom Malaysia Bhd)
2. Mechanism of payment of coupons on the Sukuk : Periodic sukuk coupon payment is
not guaranteed and had to be paid from the dividend income derived from the equities of
Telekom Malaysia
3. Uncertainties of coupon payments are addressed by creation of sinking fund account
for the benefit of the investors, wherein the dividends were accumulated to ensure
availability of funds to make payment throughout the life of the transaction.
Islamic structure for Khazanah’s Islamic Exchangeable Bonds
Sukukholders
i.
ii.
Rafflesia
iii.
Orchid
iv.
v.
Khazanah
Two special purpose companies, Rafflesia Capital Ltd.
(“Rafflesia”) (the Issuer) and Orchid Capital Ltd. (“Orchid”)
will be held in trust for the benefit of charities to be nominated
by Khazanah.
Khazanah will sell the Exchange Property, comprising the
beneficial ownership of Shariah- compliant assets, i.e. shares
to Orchird, which in turn sells the beneficial ownership in the
shares to Rafflesia.
Khazanah will retain the voting rights attached to TM shares.
Rafflesia has the beneficial interest over TM shares which it
holds in trust for the Sukuk holders.
The Issuer then issues the Exchangeable Trust Certificates
which evidence the beneficial ownership interests of Sukuk
holders in the shares.
Expected fixed periodic payments will be provided in cash out
of the dividends paid out by the shares.
Periodic Payment Exchangeable Trust Certificates - Ongoing
Periodic Payment Exchangeable Trust Certificates - Maturity
Please refer to the next slide for the criteria.
**Conversion of TM shares
The underlying financing assets (Telekom M’sia equities) were
changed to the shares TM and Axiata respectively due to the
restructuring done at Telekom M’sia Bhd level in year 2008.
Shariah Compliance
Apart from the above, there are also 2 other items that are in place :
• In event of the above are breach : failed financial ratio tests OR delisted from Shariah Approved List of
SC; there is a put option in place for early redemption of the sukuk
• Dividends that have interest income need to be stripped off – purification of dividend
Comparison between Islamic & Conventional Exchangeable Bonds
Khazanah Exchangeable
Sukuk #2
Khazanah Exchangeable
Sukuk #1
Khazanah Exchangeable
Sukuk #3
List of Awards Won