KUALA LUMPUR: The prominence of sukuk will increase in the years to come due to the limited liquidity in the global market, said HSBC Amanah Malaysia Bhd CEO Rafe Haneef.

He said Malaysia would assume an important role in terms of developing new instruments in the sukuk market and reach new heights in terms of scale, debt and variety of instruments available.

“Malaysia is the first to issue a dual tranche sukuk of five-year and 10-year fixed rate in 2011. We are also the first to do the renminbi sukuk and the first to help the world look beyond the local currency sukuk. Hopefully, we will also be the first to tap either the samurai or urudashi sukuk in years to come,” Rafe told Bernama on the sidelines of the Kuala Lumpur Islamic Finance Forum 2012.

The Malaysian government issued a US$2 billion (RM6.1 billion) dual tranche global sukuk in July 2011 comprising a five-year US$1.2 billion tranche that matures on July 6, 2016 and a 10-year US$800 million tranche that matures on July 6, 2021.

“This year will definitely be the best year for sukuk. Sukuk issuance in Malaysia accounted for 60% of the total global sukuk issued. Malaysia is still the leader in sukuk issuances and we see more project financing related to sukuk being issued in the country. This is a healthy trend. Not only do we have the size but we also have the diversity in terms of the type of instruments issued here,” said Rafe.

He said the main challenge now is to deepen the sukuk market as there was a significant shift in terms of currency. “Issuers are now doing multi-currency sukuk programmes. Recently, Axiata Group Bhd undertook the issue of a one billion renminbi sukuk, which was well received by the market.”

Earlier, AmInvestment Bank Bhd director/head of Islamic markets Datuk Mohd Effendi Abdullah said it is very important for Malaysia to have a stable environment for the sukuk market, and that the market needs to develop various asset classes to cater for the demand of investors.

“Investors are still looking for more assets and asset classes, which are quite lacking. That is why more innovation is needed for the market to issue more sukuk,” he told participants at the forum on Investment, Liquidity Management and Islamic Assets Classes. — Bernama

This article first appeared in The Edge Financial Daily, on Oct 18, 2012.