Published: Wednesday September 19, 2012 MYT 4:46:00 PM

Ringgit-denominated bonds to reach RM100b year-end: AIFM

KUALA LUMPUR: AmIslamic Funds Management Sdn Bhd (AIFM) expects ringgit-denominated bonds to hit between RM90bil and RM100bil by year-end, with 60% of the bonds coming from Islamic bond (sukuk) issuances.

"We anticipate the bulk of the issuance is for projects under the Economic Transformation Programme," said Sukuk and Alternative Investment Executive Director, Mohd Farid Kamarudin.

Currently, ringgit-denominated bonds stood at about RM65 billion to RM70 billion, he said.

"We expect more Islamic bonds to be issued this year as the market needs diversification in terms of issuance and the region as well," he told reporters after the launch of the AmGlobal Sukuk on Wednesday.

Also present were AmBank Group Chairman Tan Sri Azman Hashim, AmIslamic Bank Bhd Chief Executive Officer Datuk Mahdi Murad and AMMB Holdings Bhd Chief Executive Officer for Funds Management Division Datin Maznah Mahbob.

On the newly launched fund, Mohd Farid said the Shariah-compliant fund aims to provide capital appreciation by investing primarily in sukuk both locally and globally.

AmGlobal Sukuk is a US dollar-denominated global sukuk fund, managed by AIFM. "We will work closely with our Shariah adviser for the fund, Amanie Advisors Sdn Bhd, where they will screen all the issuers that we will issue to them, as we only purchase bonds that are accepted by the Middle East stake terms interpretation," he said.

Aiming for returns of four per cent per annum for the AmGlobal Sukuk fund, Mohd Farid said the fund will give investors exposure to a multi-currency denominated sukuk funds.

As this fund is based in US dollar, the core sukuk for this fund will be US dollar to avoid any unnecessary exposure to currency risk, he added.

He said for the US dollar-denominated sukuk, they are expecting the issuance to hit US$125 billion by year end.

Meanwhile, Azman said AIFM would rely on its stringent investment processes coupled with superior credit selection, through its proprietary in-house credit research team to deliver favourable returns in light of calculated risks.

"We will also consider sukuk with favourable or improving credit outlook that should provide the capital appreciation for these investments.

"We are very much encouraged with the continuous issuance of new sukuk and see it as an asset class with growing investment opportunities, making it essentials for portfolio diversification," he added.

Azman said AmGlobal Sukuk is a suitable investment for investors who want steady growth in value by investing in sukuk as asset class, have medium- to long-term investment goals and are willing to assume additional risk associated with investing in sukuk with longer duration and lower credit ratings.

The fund has an approved size of 250 million units and investors may subscribe for the units either in US dollar or ringgit.

Its minimum and additional investment are US$$500 and US$250, respectively for non-Malaysian residents and RM2,000 and RM1,000 for Malaysian residents, respectively. - Bernama

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