KUALA LUMPUR, June 18 Societe Generale (SocGen)
has concluded the marketing roadshow for its 1 billion
ringgit ($311 million) sale of Islamic bonds in Malaysia and
will decide on the size of its first issuance within days.
France's third-largest bank by assets plans to sell sukuk
with maturities ranging up to 15 years, and has already received
approval from Malaysia's central bank and securities regulator.
SocGen is the second conventional bank to announce a
Malaysian sukuk sale this month after Japan's Bank of
Tokyo-Mitusbishi UFJ, and adds to a rising number of foreign
firms entering a market typically reliant on domestic issuers.
An accommodative tax regime and strong local demand have
made Malaysia's Islamic capital market attractive for
international issuers, and big names such as SocGen could
encourage even more entrants, analysts said.
"We are also looking at growing our business in Southeast
Asia. We looked and realized that there was quite a large pool
of Islamic funds," Jacqueline Tan, SocGen head of global market
sales, said at a media briefing on Wednesday.
The French bank is targeting Malaysian investors seeking
ringgit-denominated bonds sold by foreign institutions.
"Had we issued a (U.S.) dollar sukuk in Malaysia it wouldn't
be meaningful because foreign investors could get SocGen dollar
sukuk outside of Malaysia," said Tan.
At $311 million, the sale is a fraction of the 20 billion to
22 billion euros ($27 billion to $30 billion) worth of debt
SocGen plans to sell in 2014. So far this year, the bank has
sold bonds totalling 10.6 billion euros.
Malaysia's government is working to internationalise its
Islamic capital market by attracting foreign firms, while SocGen
is aiming to diversify its investor base by selling sukuk.
"(The sale is) not huge but we are always keen to tap into a
new group," said Philippe Dufay, SocGen director of solutions
for global markets.
Dufay said the bank invested a considerable amount of time
preparing for the sale.
"That was a challenge because it was a long process and it
took us one year to complete. We had to make sure we built a
program matching the regulation, and matching the expectation of
the investor in terms of currency, structure and rating."
There were also cost premiums to enter a market as a
"What we hope is that if we see appetite to renew or
increase the size (of the sale), we will not have to incur the
same level of cost," said Pascal Lambert, SocGen head of
SocGen hopes its experience selling sukuk in Malaysia will
enable it to evolve into an advisor in the field.
"We can share our experience and in the future advise
clients who want to diversify their financing sources to issue
sukuk in Malaysia," said Tan.
SocGen plans to sell the sukuk through a wholly owned
subsidiary, and a structure featuring contracts that would
provide investors legal recourse to the French lender.
Hong Leong Bank Bhd subsidiary Hong Leong Islamic
Bank Bhd is advising the sale.
($1 = 3.2170 Malaysian Ringgit)
($1 = 0.7345 Euro)
(Reporting by Al-Zaquan Amer Hamzah and Hawa Semasaba; Editing
by Christopher Cushing)