The MRT Project is a proposed three-line Mass Rapid Transit system in Kuala Lumpur / Klang Valley. It is one of the projects under Greater Kuala Lumpur - Klang Valley Public Transport Masterplan. The project was announced in December 2010 by the Government of Malaysia, and was launched by Prime Minister YAB Dato’ Sri Mohd Najib bin Tun Abdul Razak on 8 July 2011.

The first line of MRT Project is the Kajang Line (previously known as Sungai Buloh-Kajang Line or SBK Line), which stretches 47km with 29 stations. Kajang Line is completed and fully operated on 17 July 2017.

The second MRT line is the Putrajaya Line (previously known as Sungai Buloh-Serdang-Putrajaya or SSP Line), which stretches for 56.2km and will have 36 operational stations. Phase One of the alignment, which runs from Kwasa Damansara to Kampung Batu, was launched by the Prime Minister YAB Dato’ Sri Ismail Sabri on 16 June 2022. Full operation is scheduled to commence in Q1 2023.

The MRT3 Circle Line is the third line proposed under the Klang Valley MRT (KVMRT) Project, where the proposed alignment runs 50.8km-long. It is the critical final piece to complete Kuala Lumpur’s urban rail network, where it will integrate with all existing radial rail lines of the Klang Valley Urban Rail Network at 10 integration points.

Further information on MRT Project can be obtained from MRT Corp’s website at www.mymrt.com.my or by contacting MRT Corp directly through the following:

Postal Address :               

Tingkat 5, Menara I & P 1,
No. 46, Jalan Dungun, Bukit Damansara,
50490 Kuala Lumpur, Malaysia.
Tel: +603-2095 3030    Fax: +603-2095 2121

DanaInfra is an infrastructure funding entity established on 3 March 2011 and is a company wholly-owned by the Minister of Finance, Incorporated. Currently, it has an authorised share capital of RM100.0 million and a paid-up capital of RM30.0 million.

DanaInfra was established pursuant to the Economic Council’s decision on 14 June 2010 after in-depth consideration for the need to have an Infrastructure Financing Entity (“IFE”) to advise and undertake funding for the proposed Mass Rapid Transit project (“MRT Project”). The main objectives of the IFE are as follows:

• Separate fund raising activity from infrastructure construction
• Develop the most cost competitive, efficient and sustainable financing models
• Maintain Government’s fiscal position through most competitive financing and timely disbursement of fund

DanaInfra’s role is to raise the financing for infrastructure projects in Malaysia that has been identified by the Government. The mandates entrusted to DanaInfra include amongst others:

• Advise on best methods of fundraising exercise and most effective payment structures
• Develop best structures for long-term funding at efficient cost
• Execute and implement fundraising and payment strategies
• Identify strategic investors

In line with these mandates, DanaInfra is responsible to source for financing of MRT Kajang Line (previously known as Sungai Buloh-Kajang Line or SBK Line) and Putrajaya Line (previously known as Sungai Buloh-Serdang-Putrajaya or SSP Line).

Additionally, DanaInfra was further mandated to provide part-funding for the construction of Pan Borneo Highway Sarawak (Phase 1) and Light Rail Transit Line 3 (“LRT 3 Project”).

DanaInfra’s mandate includes to undertake fundraising exercise for MRT Kajang Line and Putrajaya Line. In June 2015, DanaInfra has also been mandated to undertake fundraising exercise for the construction of Pan Borneo Sarawak Highway Project (Phase 1). Subsequently in January 2021, DanaInfra was further mandated to undertake fundraising exercise to part-finance the construction of LRT 3 Project.

The composition of the Board of DanaInfra is as follows:

• Datin Rashidah Mohd Sies – Deputy Secretary General of Treasury, Ministry of Finance
• Dr. Mastura Abdul Karim - Under Secretary of Fiscal and Economics Division (FED), Ministry of Finance

The repayment of the Sukuk will be from the annual funding allocations from the Government.

DanaInfra framework which indicates clear segregation of duties and responsibilities is illustrated as below.

MRT Project

Pan Borneo Sarawak Project

LRT 3 Project

The current Funding structure is illustrated below.

MRT Project

Pan Borneo Sarawak Project

LRT 3 Project

The ICP/IMTN Programmes are Islamic Commercial Papers (“ICP”) and Islamic Medium Term Notes (“IMTN”) Programmes (“ICP/IMTN Programme”) established by DanaInfra to raise financing to fund the following:

• The Kajang Line and Putrajaya Line of the MRT Project;
• Part-finance the construction cost of Pan Borneo Sarawak Project.
• Part-finance the LRT 3 Project.

The financing programme undertaken by DanaInfra is on project basis. At present, the ICP/IMTN Programme for MRT Project has a limit of up to RM71.0 billion in nominal value and is irrevocably and unconditionally guaranteed by the Government of Malaysia. The ICP/IMTN Programme for Pan Borneo Sarawak Project has a limit of up to RM13.0 billion in nominal value and is irrevocably and unconditionally guaranteed by the Government of Malaysia. The ICP/IMTN Programme for LRT 3 Project has a limit of up to RM7.6 billion in nominal value and is irrevocably and unconditionally guaranteed by the Government of Malaysia.

DanaInfra Nasional Berhad.

All ICP/IMTN Programmes has a tenure of up to fifty (50) years from the date of the first issuance of Sukuk of the respective ICP/IMTN Programme.

For the ICPs: The ICPs can be issued for any tenure of one (1), three (3), six (6), nine (9) and up to twelve (12) months as the Issuer may select, provided that the maturity date of the ICPs shall not extend beyond the tenure of the respective ICP/IMTN Programme.

For the IMTNs: The IMTNs shall have maturities of more than one (1) year provided that the maturity date of the IMTNs shall not extend beyond the tenure of the respective ICP/IMTN Programme.

All ICP/IMTN Programmes are backed by a guarantee by the Government of Malaysia. Repayment shall be made through annual allocations by the Government on deferred payment basis.

The guarantee is an irrevocable and unconditional obligation by the Government in favour of the Facility Agent (on behalf of the Sukukholders) whereby the Government guarantees the payment by DanaInfra of the Guaranteed Amount. If for any reason DanaInfra fails to make payment of the ICP/IMTN when due, the Sukukholders shall have the right to enforce the guarantee for the Government to pay the Guaranteed Amount.

The “Guaranteed Amount” refers to all monies and liabilities (whether actual or contingent) that is owing or payable or expressed to be due owing or payable by DanaInfra. In relation to the ICP/IMTN Programme, the guaranteed amount covers:

(a) the nominal value of the Sukuk; and

(b) in the case of IMTNs with periodic profit payments, any accrued profit and unpaid profit thereon.

Provided that the combined aggregate outstanding nominal value of the Sukuk and the outstanding principal amount under the SFF-i Facility and RC-i Facility guaranteed by the Guarantor shall not exceed RM71.0 billion (MRT Project), RM13.0 billion (Pan Borneo Sarawak Project) and RM7.6 billion (LRT 3 Project) at any one time.

The MRT Project, Pan Borneo Sarawak Project and LRT 3 Project are essentially infrastructure projects, undertaken for the benefit of the Rakyat. The Government wants to ensure that the MRT Project, Pan Borneo Sarawak Project and LRT 3 Project can be funded in a cost-efficient manner so that any cost-savings can be passed on to the Rakyat. Also, due to the nature of the project and the long gestation period, the repayment profile of any fundraising will naturally have to be long-tenured with deferred payment mechanism. As such, the current mode of financing is the most viable and efficient from a cost and size perspective.

Yes.

No.

DanaInfra may be used as the financing vehicle to facilitate the fund raising of future Government infrastructure projects. As such, the financing terms allow DanaInfra to undertake further financings in the future.

The underlying Shariah principles under both ICP/IMTN Programmes is Murabahah (via a Tawarruq arrangement). DanaInfra has the option to change to other Shariah principles. Any changes in Shariah principles will be determined prior to each ICP/IMTN issuance.

The SFF-i Facility and RC-i Facility are to complement the ICP/IMTN Programme and work as back-stop funding for DanaInfra.

The limit of the ICP/IMTN Programme of RM71.0 billion (MRT Project), RM13.0 billion (Pan Borneo Sarawak Project) and RM7.6 billion (LRT 3 Project) may, at the option of the Issuer, and without further reference to or consent by the Sukukholders, be increased provided that any Sukuk issued pursuant to the increased limit shall be irrevocably and unconditionally guaranteed by the Government.

DanaInfra has been granted remission of tax and stamp duty under the Loans Guarantee (Bodies Corporate) (Remission of Tax and Stamp Duty). With this, any tax payable by DanaInfra or any holders of the Sukuk will be remitted in full.

The proceeds of the RM71.0 billion ICP/IMTN Programme will be used to finance the capital expenditure and operating expenses in relation to the development of the MRT Project Kajang Line and Putrajaya Line including but not limited to the following:

• Progressive payments to contractors;
• Purchase of equipment;
• Settlement of advances from any relevant entities;
• Pre-construction costs including but not limited to financing costs, financial advisor’s fee, advisory costs and fees for solicitors, project delivery partners and independent consultant engineers;
• All operating expenses including but not limited to all pre-operating expenses, costs relating to the tender process, administrative, financial, legal and staff costs incurred by DanaInfra and/or MRT Corp in relation to the MRT Project; and
• To refinance any bridging facility or other credit lines undertaken by DanaInfra in relation to the MRT Project.

The proceeds of the RM13.0 billion ICP/IMTN Programme will be used to finance expenditures and/or payments in relation to the Pan Borneo Sarawak Project including but not limited to the following:

• Construction costs and progressive payments to contractors;
• Operating and transactional costs and expenses;
• Financing costs including but not limited to all profit, fees, costs and expenses in connection with the ICP/IMTN Programme, the RC-i Facility, any bridging facility or other banking/financing facilities and/or credit lines; and
• To refinance any bridging facility (including the RC-i Facility) or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the Pan Borneo Sarawak Project and/or payment of any principal sum falling due for payment thereunder.

The proceeds of the RM7.6 billion ICP/IMTN Programme will be used to finance expenditures and/or payments in relation to the LRT 3 Project including but not limited to the following:

• Construction costs and progressive payments to contractors;
• Operating and transactional costs and expenses including but not limited to consultant fees;
• Financing costs including but not limited to all profits, fees, costs and expenses in connection with the ICP/IMTN Programme, the RC-i Facility, any bridging facility or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the LRT 3 Project; and
• To refinance any bridging facility (including the RC-i Facility) or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the LRT 3 Project and/or payment of any principal sum falling due for payment thereunder or in connection with the ICP/IMTN Programme.

All ICP/IMTN Programmes are guaranteed by the Government of Malaysia and therefore, not rated.

Yes, the Sukuk are transferable.

The JLA’s role is to structure and execute a complete financing requirement, coordinating with related parties such as legal advisors, reporting accountants, rating agencies etc.

Whilst the JLM’s role is to jointly raise the required funding either through participation in a lending syndicate or sale of debt instrument to potential investors through a book running process. They may also take up a portion of the financing to be issued themselves.

In DanaInfra’s case, the 4 JLAs also provide commitment for the SFF-i Facility and RC-i Facility.

The Facility Agent for DanaInfra is CIMB Investment Bank Berhad (ICP/IMTN Programme under MRT Project and Pan Borneo Sarawak Project) and Maybank Investment Bank Berhad (ICP/IMTN Programme under LRT 3 Project).

The Shariah Adviser is CIMB Islamic Bank Berhad (ICP/IMTN Programme under MRT Project), RHB Islamic Bank Berhad (ICP/IMTN Programme under Pan Borneo Sarawak Project) and Maybank Islamic Berhad (ICP/IMTN Programme under LRT 3 Project).

Yes. Bank Negara Malaysia.

DanaInfra has a standby facility that is the Syndicated Islamic Revolving Credit Facility which serves to ensure availability of funds at all times. We will ensure that the funding requirements for the MRT Project, Pan Borneo Sarawak Project and LRT 3 Project will be met.

Yes, as the Issuer, DanaInfra will ensure that the Minister of Finance (Incorporated) holds directly and/or indirectly at least fifty one per centum (51%) of the ordinary paid-up share capital of the Issuer at all times.

The SFF-i Facility and RC-i Facility is a Syndicated Revolving Credit-i Facility of up to RM2.0 billion (MRT Project), RM4.0 billion (Pan Borneo Sarawak Project) and RM1.0 billion (LRT 3 Project), irrevocably and unconditionally guaranteed by the Government.

DanaInfra Nasional Berhad.

The tenure of SFF-i Facility for MRT Project is extended for another one (1) year from the expiry date of the SFF-i Facility to 22 August 2022.

The tenure of RC-i Facility for Pan Borneo Sarawak Project is five (5) years with an option to extend for another one (1) year.

On the other hand, the tenure of RC-i Facility (LRT 3 Project) is six (6) years with an option to extend not exceeding the tenure of the Government Guarantee.

Yes, they are guaranteed by the Government of Malaysia.

The guarantee is an irrevocable and unconditional guarantee by the Government of Malaysia.

In relation to the SFF-i Facility and RC-i Facility, the Guaranteed Amount refers to the outstanding principal sums and accrued and unpaid profit thereunder.

Yes.

The Shariah principles of Murabahah (via Tawarruq arrangement).

No.

The proceeds of the RM2.0 billion SFF-i Facility will be used to finance the following capital expenditure and operating expenses in relation to the development of the MRT Project Kajang Line and Putrajaya Line, including but not limited to the following:

• Progressive payments to contractors;
• Purchase of equipment;
• Settlement of advances from any relevant entities;
• Pre-construction costs including but not limited to financing costs, financial advisor’s fee, advisory costs and fees for solicitors, project delivery partners, and independent consultant engineers;
• All operating expenses including but not limited to all pre-operating expenses, costs relating to the tender process, administrative, financial, legal and staff costs incurred by DanaInfra and/or MRT Corp in relation to the MRT Project; and
• To re-finance any bridging facility or other credit lines undertaken by DanaInfra in relation to the MRT Project.

The proceeds of the RM4.0 billion RC-i Facility will be used to finance expenditures and/or payments in relation to the Pan Borneo Sarawak Project including but not limited to the following:

• Construction costs and progressive payments to contractors;
• Operating and transactional costs and expenses;
• Financing costs including but not limited to all profit, fees, costs and expenses in connection with the RC-i Facility, the ICP/IMTN Programme, any bridging facility or other banking/financing facilities and/or credit lines; and
• To refinance any bridging facility or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the Pan Borneo Sarawak Project and/or payment of any principal sum falling due for payment thereunder or in connection with the ICP/IMTN Programme.

The proceeds of the RM1.0 billion RC-i Facility will be used to finance expenditures and/or payments in relation to the LRT 3 Project including but not limited to the following:

• Construction costs and progressive payments to contractors;
• Operating and transactional costs and expenses including but not limited to consultant fees;
• Financing costs including but not limited to all profits, fees, costs and expenses in connection with the RC-i Facility, the ICP/IMTN Programme, any bridging facility or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the LRT 3 Project; and
• To refinance any bridging facility (including any outstanding principal portion under the RC-i Facility) or other banking/financing facilities and/or credit lines undertaken by DanaInfra in relation to the LRT 3 Project and/or payment of any principal sum falling due for payment thereunder or in connection with the ICP/IMTN Programme.

The Facility Agent is CIMB Investment Bank Berhad (SFF-i Facility under MRT Project and RC-i Facility under Pan Borneo Sarawak Project) and Maybank Investment Bank Berhad (RC-i Facility under LRT 3 Project).

The Shariah Adviser is CIMB Islamic Bank Berhad (SFF-i Facility under MRT Project), RHB Islamic Bank Berhad (RC-i Facility under Pan Borneo Sarawak Project) and Maybank Islamic Berhad (RC-i Facility under LRT 3 Project).

The profit period shall be 1 week, 2 weeks, 1 month, 2 months, 3 months, 4 months, 5 months or 6 months, at the option of DanaInfra.

Profit shall be paid in arrears on a Profit Payment Date which will be calculated from the date of disbursement. 

Yes, DanaInfra shall ensure that the Minister of Finance (Incorporated) holds directly and/or indirectly at least fifty one per centum (51%) of its ordinary paid-up share capital for so long as the indebtedness remains outstanding. 

DanaInfra Retail Sukuk is an Exchange Traded Bonds / Sukuk (“ETBS”) issued by DanaInfra and guaranteed by the Government of Malaysia.

DanaInfra Retail Sukuk is created as part of DanaInfra’s efforts to broaden its investor base by allowing participation by retail investors in funding the national infrastructure project i.e. the MRT Project, whilst diversifying their investment portfolio in the bond / sukuk market. The issuance of retail sukuk is also part of the initiatives under the Capital Market Masterplan 2 to facilitate greater retail participation in the bond and sukuk market and intended to make available a wider range of investment products to retail investors.

The proceeds of DanaInfra Retail Sukuk will be utilised to finance the construction and development of the MRT Project.

The regulatory bodies governing the ETBS are Securities Commission Malaysia and Bursa Malaysia.
To obtain further information, kindly visit their respective websites as follows:

• Securities Commission Malaysia - www.sc.com.my
• Bursa Malaysia - www.bursamalaysia.com

Yes, as DanaInfra Retail Sukuk is guaranteed by the Government of Malaysia.

DanaInfra Retail Sukuk is guaranteed by the Government and therefore, not rated.

Yes, DanaInfra Retail Sukuk is listed and traded under Bursa Malaysia.

For more information on the terms, you may visit www.danainfra.com.my.

The instrument is suitable for retail investors who are looking for diversification into long term investment with guaranteed payment of Profit and Face Value at maturity.

PIDM insures up to RM250,000 worth of principal and profit for deposits with licensed financial institutions. The Profit Payments and Face Value under DanaInfra Retail Sukuk are fully guaranteed by the Government.

A total of RM500 million of DanaInfra Retail Sukuk has been issued as at December 2022.

DanaInfra has issued Retail Sukuk with 7, 10 and 15 years tenure.

It is the intention of DanaInfra to issue more Sukuk in the future to finance the MRT Project if deem appropriate.

The minimum subscription amount is RM1,000. There is no maximum limit for the subscription amount. Subscriptions will be in multiples of RM1,000.

The Issuer will conduct a ballot to determine the allocation to retail investors in a fair and equitable manner.

The Profit Rate is determined at the close of the book building of the institutional offering based on the demand and the prevailing market interest rate.

Yes, DanaInfra Retail Sukuk is a Shariah-compliant investment. CIMB Islamic Bank Berhad as the Shariah adviser ("Shariah Adviser") has issued a Shariah pronouncement in respect of DanaInfra Sukuk and its compliance with Shariah principles.

To apply for DanaInfra Retail Sukuk, you must be one of the following: 

1. A Malaysian citizen who is at least 18 years old as at the closing date of the retail offering with a Malaysian address
2. A corporation / institution incorporated in Malaysia with majority shareholding (excluding preference shares) held by Malaysian citizens
3. A superannuation, cooperative, foundation, provident or pension fund established or operating in Malaysia

Applications from trustees, persons under 18 years of age, sole proprietorship, partnerships or other incorporated bodies or associations, other than corporations, institutions, referred to (2) and (3) above or the trustees thereof will not be accepted.

• No requirement for a bank account if application is made via application form to Malaysian Issuing House Sdn Bhd.
• No requirement for Internet access as application can also be made via application form or the Automated Teller Machines (“ATMs”) of selected Participating Financial Institutions

Individual account

Company account

A CDS account alone will not allow you to buy and sell sukuk. You will need to open a Trading Account with any stockbrokers registered with Bursa Malaysia (also known as Participating Organisations or ‘POs’ in Bursa Malaysia’s website).

No document is required aside from a photocopy of the applicant’s identity card if investors apply for DanaInfra Retail Sukuk via application forms. Alternatively, investors may apply via Internet Banking or the ATMs of the selected Participating Financial Institutions.

Yes, you may apply for DanaInfra Retail Sukuk via Internet Banking as follows:

• CIMB - www.cimbclicks.com.my
• CIMB Investment - www.eipocimb.com
• Maybank - www.maybank2u.com.my
• RHB - www.rhb.com.my

Sample of the Mandatory Statements are as follows:

• I am 18 years of age or older
• I am a Malaysian citizen with a residential address in Malaysia
• I agree to the terms and conditions of application stated in the Application Form
• This is my only application and is submitted at my own risk
• My personal particulars with the participating bank and Bursa Depository is correct and may be given to the Issuing House and relevant regulatory bodies

Successful applications - A notice shall be sent to the correspondence address of successful applicants as stated in your CDS account.

For unsuccessful applications, the refund amount will be returned by cheque / credited to your account within 10 business days (for application form applicants) and 4 business days (ATM or Internet applicants) after the balloting day.

No, each investor can only submit one application per issuance. Multiple applications will render all your applications void.

You have to pay a processing fee of between RM1.00 to RM2.50 per application for the application made via the ATMs or Internet banking of the Participating Financial Institution. 

For manual application, the application form is given for free.

There will be no fee at the point of subscription. However, the transaction cost in the secondary market is 0.33% of the trade value.

The retail investors will have to bear their respective transaction cost.

The Profit Payments will be paid semi-annually.

Trading hours for all instruments listed and traded on Bursa Malaysia on business days are as follows:

Morning session : 9.00am to 12.30pm
Afternoon session: 2.30pm to 5.00pm

The same trading hours apply to DanaInfra Retail Sukuk.

Your investment will not be affected as the Profit Payments and Face Value of DanaInfra Retail Sukuk are fully guaranteed by the Government, irrespective of the outcome of the MRT Project.

Latest pricing of DanaInfra Retail Sukuk can be obtained from Bursa Malaysia’s website (www.bursamalaysia.com).

No, as the Profit Rate per annum will be fixed throughout the tenure of DanaInfra Retail Sukuk.

The key differences are:

1. ETBS holders are essentially financiers of the company, while shareholders are owners of the company
2. ETBS holders’ profits are at a fixed rate via steady periodic payments known as coupons / profits. Meanwhile, for shareholders, profits are termed as dividend payments of which are based on the company’s performance and they are paid at the discretion of the company
3. Investment in ETBS would involve a fixed maturity period, while investment in shares do not have a maturity period.

Unit trust represents a pool of investments of a group of investors to invest in diversified portfolio of investments including bond / sukuk through fund managers. In ETBS, retail investors can directly invest in any retail bond / sukuk.

The factors affecting the yield and price of a bond / sukuk among others include the movement of market interest rate, demand and supply of the bond / sukuk, credit risk of the issuer and the level of inflation.

At the point of issuance, prices quoted on the exchange will be RM100.

The price will change due to movement in market interest rates, remaining period to maturity as well as accrual of coupon / profit payable for the period.

Kindly refer to www.bondinfo.bnm.gov.my for further details on bonds / sukuk.

Coupon / profit payments will follow the current dividend payment setup for your trading account, either through electronic payment or cheque from the Issuer's paying agent.

The Profit Payment will be credited directly into the bank account of the holders of DanaInfra Retail Sukuk as indicated in the CDS account. 

For those without details of bank account in the CDS account, a cheque will be mailed to the correspondence address maintained in the CDS account. Kindly refer to Bursa Malaysia’s website at www.bursamalaysia.com for further details.

The coupon / profit payment is calculated using the following formula:

Profit payable = Profit Rate (“PR”) x Face Value (“FV”) x (holding period / 365 days)

Assumptions:
PR : 4% per annum
FV : RM1,000

The calculation for annual coupon / profit payment may be illustrated as follows:
= 4% x RM1,000 x (365 days / 365 days)
= RM40.00

Since coupon / profit is paid semi-annually, the coupon / profit payment per payment period is:
= RM40.00 / (182 days / 365 days)
= RM19.95

Coupon / Profit will be paid to investors semi-annually until maturity.

The coupon / profit payment is paid to holders of DanaInfra Retail Sukuk on semi annual basis.

The next coupon / profit payment is due on 11 August 2021. Kindly refer to Bursa Malaysia’s announcement for further information at https://www.bursamalaysia.com/market_information/announcements

To calculate the value of your bond / sukuk, you can use the online bond / sukuk calculator available in Bursa Malaysia’s website at www.bursamalaysia.com/etbs.

There is no holding period. Holders of DanaInfra Retail Sukuk may sell his / her holding at any time from the date of listing, or choose to hold to maturity.

At the time of issue of the sukuk, the profit rate and other conditions of the sukuk will have been influenced by a variety of factors, such as current market interest rates, the length of the tenor and the creditworthiness of the issuer.

With the creditworthiness of the issuer backed by Government Guarantee, the factor that would likely change over time is the market interest rates.

The market price of a sukuk is the present value of all expected future profit and principal payments of the bond discounted at the sukuk's redemption yield, or rate of return. That relationship is the definition of the redemption yield on the sukuk, which is likely to be close to the current market interest rate for other sukuk / bonds with similar characteristics. The yield and price of a sukuk are inversely related, hence, when market interest rates rise, sukuk prices fall and vice versa.

As such when the market interest rate for other sukuk / bonds with similar characteristics falls below the yield of the sukuk held, the retail sukuk holder may sell his / her holding for a gain on the face value of the sukuk. At the point of sale, any profit accrued shall be paid by the purchaser to the seller.

Please consult your professional financial adviser.

The ETBS offered to retail investors have the same characteristics as the bonds / sukuk distributed to institutional investors. The difference lies in the distribution platform for the primary issuance as well as the secondary trading whereby the ETBS are exchange-based while the traditional bonds / sukuk have been traded over the counter or (“OTC”) amongst institutional investors.

The other difference is in the lot size per transaction whereby ETBS transacted in lots of RM1,000 while institutional investors transact in lot sizes of RM5,000,000.

There is no limitation to whom a retail sukuk holder may sell his/her holdings to. However, institutional investors would normally purchase sukuk in RM5,000,000 lot sizes.

This is where the exchange becomes the intermediary to bridge the connectivity between the retail and institutional investors. Banks may act as intermediaries to acquire the retail lots that are being sold to the exchange by retail investors.

These retail lots held by banks may then be 1) held either as stockpile to sell to other retail investors wishing to acquire retail sukuk on the secondary market through the exchange, or 2) be bunched up into lot sizes of RM5,000,000 to be sold to institutional investors through the OTC platform.

The reverse may also happen whereby institutional sukuk holders may offer their holdings to retail investors via the exchange. The banks may again act as intermediaries by acquiring the RM5,000,000 OTC lots and breaking them down for distribution in the RM1,000 retail lots.