(adds "million" to the value of Bank of Tokyo-Mitsubishi UFJ
sukuk in the seventh paragraph)
* SocGen second conventional bank to set up sukuk in
* New issuers aiding Malaysia's efforts to globalise capital
* Sukuk market expected to rebound by 10 pct in 2014-2015
KUALA LUMPUR, June 12 Societe Generale
, France's third-largest bank by assets, will set up a
1 billion ringgit ($311.3 million) multi-currency sukuk (Islamic
bonds) programme in Malaysia, the second conventional bank to do
so in as many weeks.
Sukuk are growing in popularity as a funding choice for
corporates and sovereigns across the globe, with Malaysia a
preferred jurisdiction as the largest and most liquid Islamic
The programme would issue sukuk through a wholly owned
subsidiary of SocGen, a structure featuring back-to-back
sharia-compliant contracts that would provide investors legal
recourse to the French lender, Kuala Lumpur-based credit ratings
firm RAM Ratings said in a bourse filing on Thursday.
The sukuk wakalah program has a tenure of up to 15 years and
has been approved by Malaysia's central bank and Securities
Commission, SocGen said in a media release on Thursday. Hong
Leong Islamic Bank Bhd is advising the deal.
"Given the advancement of Islamic finance in recent years
and the importance of the Malaysian and Southeast Asian capital
markets to its business, SocGen stands ready to issue out of its
programme at the right market conditions and timing," the bank
Reuters reported last year that SocGen was considering
issuing $300 million worth of sukuk in Malaysia, with proceeds
used to expand the bank's operations in the Middle East.
The programme, which RAM rates at AAA(s), or stable, comes a
week after Bank of Tokyo-Mitsubishi UFJ, a unit of Mitsubishi
UFJ Financial Group, set up a $500 million
multi-currency sukuk programme in Malaysia.
Such new issuers are crucial in Malaysia's efforts to
internationalise its Islamic capital markets, which remains
dominated by domestic issuers. International firms represent
less than 10 percent of total issuance.
An accommodative tax regime and strong demand from local
investors have made Malaysia an attractive market for issuers
from as far away as Kazakhstan, but big names could encourage
even more firms to tap the market.
Malaysia's sukuk market saw a 26 percent slump in issuance
last year due to uncertainty ahead of national elections and
worries about the Federal Reserve's monetary policies, credit
ratings agency Moody's said in a report.
Moody's estimates issuance will pick up by 10 percent over
2014 and 2015.
($1 = 3.2130 Malaysian Ringgit)
(Reporting by Al-Zaquan Amer Hamzah and Bernardo Vizcaino;
Editing by Christopher Cushing)