Pension funds plan to boost holdings of US dollar sukuk
KUALA LUMPUR: Malaysia's two biggest state-owned pension funds, which together manage US$200 billion (RM632 billion), plan to boost holdings of US dollar sukuk as the debt beats ringgit notes.
The Employees Provident Fund, which has 27 per cent of its US$170 billion in assets invested in Malaysian sovereign bonds, will add to its US$2.2 billion of global sukuk by year-end, deputy chief executive officer Mohamad Nasir Ab Latif said in an interview here last week.
Kumpulan Wang Persaraan, meanwhile, plans to double its holdings to US$200 million, as the ringgit's 6.6 per cent drop against the dollar in four months dims the allure of local-currency paper.
Investment by funds with such "deep pockets" will encourage more local and international issuers to sell dollar sukuk in Kuala Lumpur and around the world, according to Asian Finance Bank Bhd, a unit of Qatar Islamic Bank SAQ.
Malaysia's US currency Islamic bonds due 2016 rallied this quarter, pushing the yield down 21 basis points to 1.57 per cent, while the rate on similar-maturity ringgit syariah notes rose four basis points to 3.35 per cent, data compiled by Bloomberg show.
"Their increasing presence in the global arena will help strengthen Malaysia's position as a global Islamic hub and enhance the country's visibility," Mohamed Azahari Kamil, chief executive officer at Asian Finance Bank, said. "It will also promote liquidity in the Islamic markets." Bloomberg