Kuala lumpur: Strong investor demand drove a 4.7 times oversubscription for Malaysia's US$1.5 billion Global Sukuk issuance, which was priced at a record-low spread, the Ministry of Finance (MOF) said. The issuance comprised a US$850 million 5.75-year tranche and a US$650 million 10-year tranche.
According to BERNAMA News Agency, MOF stated that robust investor interest allowed the government to tighten pricing by 30 basis points from the initial price guidance, setting the 5.75-year tranche at Treasury plus 15 basis points and the 10-year tranche at Treasury plus 25 basis points. The issuance sets a new pricing benchmark for future global issuances by government-linked entities and the private sector, reflecting ongoing confidence among global investors in Malaysia's fiscal and economic reform agenda.
The asset-backed sukuk is structured under the Manafae concept, adhering to the guidelines of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), and is supported by service rights in Malaysia's urban public rail network. Finance Minister II Datuk Seri Amir Hamzah Azizan highlighted that the MADANI Economy framework has been instrumental in guiding Malaysia's economy. He noted that the strong oversubscription and record-low spread demonstrate international investor confidence in Malaysia's economic prospects and development policies.
MOF emphasized that the strong response is a testament to the progress since the launch of the MADANI Economy framework on July 27, 2023. The fiscal deficit has narrowed to 3.7 percent of GDP in 2025 from 6.4 percent in 2021, and government borrowings have declined to nine percent of GDP from 13.6 percent over the same period. Malaysia's fiscal position has been supported by economic growth rates of 5.2 percent in 2024 and 2025, with a growth of 5.4 percent in the first quarter of 2026.
Both tranches received an A3 rating from Moody's Investors Service and an A- rating from SandP Global Ratings, consistent with Malaysia's sovereign credit ratings and stable outlook. The 5.75-year tranche was priced at a profit rate of 4.612 percent per annum with a spread of 15 basis points over the comparable US Treasury, while the 10-year tranche had a profit rate of 4.949 percent per annum with a spread of 25 basis points.
Proceeds from the issuance will be utilized for the government's Shariah-compliant general purposes, including financing development expenditure and/or refinancing existing obligations. MOF reported that its investor engagement program attracted participation from 140 international investors across different segments, including sovereign wealth funds, central banks, governments, asset managers, financial institutions, insurance companies, and pension funds.
Geographically, the 5.75-year tranche was primarily allocated to investors in Asia (76 percent), followed by Europe, the Middle East, and Africa (19 percent), and the United States (five percent). The 10-year tranche saw allocations to investors in Asia (63 percent), EMEA (18 percent), and the United States (19 percent). By investor type, the 5.75-year tranche was allocated to banks and financial institutions (43 percent), fund and asset managers (27 percent), and other sectors, while the 10-year tranche was predominantly allocated to fund and asset managers (59 percent).
The issuance adhered to Regulation S and Rule 144A of the US Securities Act of 1933 and will be listed on the Hong Kong Stock Exchange, Labuan International Financial Exchange, and Bursa Malaysia under the Exempt Regime. CIMB, HSBC, J.P. Morgan, and Standard Chartered Bank acted as joint lead managers and joint bookrunners for the issuance. The sukuk's Shariah structure received approval from the Shariah Committee Board of CIMB Islamic Bank Bhd, the HSBC Global Shariah Supervisory Committee, the Standard Chartered Global Shariah Supervisory Committee, and the JP Morgan Shariah Committee.