Saturday August 21, 2010
Celcom sukuk placement yield to be market-driven
By DANNY YAP
PETALING JAYA: Celcom Axiata Bhd expects the yield of its RM4.2bil unrated sukuk placement to three institutional subscribers to be market driven.
Celcom Axiata is a wholly-owned subsidiary of Axiata Group Bhd.
The three institutional subscribers are the Employees Provident Fund (EPF), CIMB Islamic Bank Bhd and Malayan Banking Bhd.
A Celcom Axiata official said the returns or yield from the sukuk was negotiated and agreed upon with the subscribers on an “arm’s length basis”.
“The yields were based on the overall credit strength of the Celcom group as well as prevailing market yields,” she told StarBizWeek.
The official said as with market convention, the returns on the sukuk differ based on the tenure of the notes (and not based on subscribers).
The sukuk issuance with tenures ranging from five to 10 years would be issued by Celcom’s wholly-owned subsidiary, Celcom Transmission (M) Sdn Bhd (CTX).
“The sukuk is like any other debt obligation and hence, CTX will be legally required to meet the cashflow obligations (interest and principal) based on the agreed terms,” she noted.
The official said the entire RM4.2bil sukuk would be issued upfront and shall comprise of notes of different tenures ranging from five to 10 years.
On the use of taxpayers’ money via EPF to fund the sukuk, the official said the sukuk was a debt obligation and its certainty of repayment was underpinned by the Celcom group’s strong credit profile and financial performance.
“As the subscribers comprise EPF and financial institutions, all of whom are regarded as third-party investors, the terms of the sukuk have been negotiated and agreed on a commercial and arm’s length basis,” she said.
“We believe the subscribers’ collective participation in the sukuk programme is a testament of the Celcom group’s robust credit standing and future prospects.”