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Tuesday, June 18, 2024

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SME Bank issues second sustainability Sukuk

SME Bank issued its second sustainability Sukuk on the 4th August 2022 with an issue size of RM500 million (US$112.45 million), receiving a total order of RM536 million (US$120.54 million). This Sukuk facility follows the bank’s first sustainability Sukuk effort in July 2021 which more than tripled its target, receiving a final order of RM1.78 billion (US$400.31 million).

“Another successful issuance with a competitive profit rate at 4.04% for three years. Total amount bid was RM536 million, which exceeded the initial desired size of RM300 million [US$67.47 million]. The final issuance was capped at RM500 million.

SME Bank’s sustainability Sukuk had received a good demand from local financing institutions, fund management companies, insurance companies as well government-linked investment companies thus signifying a high level of confidence from the investment community in SME Bank’s ability to deliver its mandate of nurturing and developing the SMEs,” Aria Putera Ismail, the group president and CEO of SME Bank, told ISFI.

The bank did not face any major challenges internally in executing the issuance of the Sukuk. However, there were external factors such as a challenging market and a profit rate hike environment

The proceeds from the issuance will be used to finance and or refinance new or existing eligible Shariah compliant financings that have a positive environmental and or social impact. The bank is targeting to approve RM1 billion (US$224.89 billion) in financing to eligible SMEs that qualify as per its internal ESG screening.

According to SME Bank’s Sustainability Sukuk Framework, its sustainability Sukuk contribute to the following 11 SDGs.

The bank is currently in its second year of implementing its three-year Sustainability Roadmap which is centered on three pillars: responsible banking, responsible business practices and creating social impact. It is currently in the process of finalizing its first Sustainability Sukuk Annual Report.

SME Bank Sustainability Sukuk 2022
RM500 million (US$112.45 million)
4th August 2022
Summary of terms and conditions
SME Bank
SME Bank
Size of issue
RM500 million (US$112.45 million)
Mode of issue
Book building
Finance and/or refinance, in part or in whole, new and existing eligible Shariah compliant financings, including for the construction and/or development of the Eligible Projects, provided to the Issuer’s customers that meet the criteria as set out in the Sustainability Guidelines/Framework and SME Bank’s Sustainability Sukuk Framework
Three years
Issuance price
Profit rate
Malaysian ringgit
Maturity date
4th August 2025
Lead manager(s)
RHB Investment Bank, AmInvestment Bank, Maybank Investment Bank, CIMB Investment Bank
Principal advisor(s)
RHB Investment Bank
RHB Investment Bank, AmInvestment Bank, Maybank Investment Bank, CIMB Investment Bank
Governing law
Legal advisor(s)/council
Adnan Sundra & Low
Islamic structure
Wakalah Bi Istithmar
Shariah advisor(s)
RHB Islamic Bank
‘AAAIS’ (Malaysian Rating Corporation)
Face value/minimum investment
RM5 million (US$1.12 million)
Investor breakdown
Financial institutions (46%), fund managers and insurance companies (54%)

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