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Islamic

Bank Negara Monetary Notes-i (BNMN-i)

BNMN-i are Islamic securities issued by Bank Negara Malaysia replacing the existing Bank Negara Negotiable Notes (BNNN) for purposes of managing liquidity in the Islamic financial market. The instruments will be issued using Islamic principles which are deemed acceptable to Shariah requirement. The maturity of these issuances has also been lengthened from one year to three years. New issuances of BNMN-i may be issued either on a discounted or a coupon-bearing basis depending on investors' demand. Discount-based BNMN-i will be traded using the same market convention as the existing BNNN and Malaysian Islamic Treasury Bills (MITB) while the profit-based BNMN-i will adopt the market convention of Government Investment Issues (GII).

 

Malaysian Islamic Treasury Bills (MITB)

MITB are short-term securities issued by the Government of Malaysia based on Islamic principles. MITB are usually issued on a weekly basis with original maturities of 1-year. MITB auctions are held one day before the issue date. The successful bidders will be determined according to the most competitive yield offered. Both conventional and Islamic institutions can buy and trade MITB .

The MITB are structured based on Bai' Al-Inah principle, part of sell and buy back concept. Bank Negara Malaysia on behalf of the Government will sell the identified Government's assets on competitive tender basis, to form the underlying transaction of the deal. Allotment is based on highest price tendered (or lowest yield). Price is determined after profit element is imputed (discounting factor). The successful bidders will then pay cash to the Government. The bidders will subsequently sell back the assets to the Government at par based on credit term. The Government will issue MITB to bidders to represent the debt created.

MITB are tradable on yield basis (discounted rate) based on bands of remaining tenure (e.g., Band 4= 68 to 91 days to maturity). The standard trading amount is RM5 million, and it is actively traded based on Bai ad-Dayn (debt trading) principle in the secondary market.

Government Investment Issue (GII)

GII is long-term non-interest-bearing Government securities based on Islamic principles issued by the Government of Malaysia for funding developmental expenditure. Similar with MGS, GII is issued through competitive auction by Bank Negara Malaysia on behalf of the Government. The GII issuance programme is pre-announced in the auction calendar with issuance size ranging from RM1 billion to RM3.5 billion and original maturities of 3-year, 7- year, 5-year and 10-year.

GII is based on Bai' Al-Inah principles, part of the sell and buy back concept in Islamic finance. Under this principle, the Government will sell specified nominal value of its assets and subsequently will buy back the assets at its nominal value plus profit through a tender process. Profit rate is based on the weighted average yield of the successful bids of the auction. The nominal value of buying back the assets will be settled at a specified future date or maturity, while the profit rate will be distributed half yearly. The obligation of the Government to settle the purchase price is securitised in the form of GII and is issued to the investors. At maturity, the Government will redeem the GII and pay the nominal value of the securities to the GII holders. GII is one of the financial instruments that are actively traded in the Islamic Interbank Money Market.

     

     

     

Sukuk Perumahan Kerajaan (SPK)

SPK is a Shariah compliance long-term profit-based Government securities issued based on Commodity Murabahah structure. SPK is issued by the Government of Malaysia under the Housing Loan Fund Act 1971 to refinance funding for housing loans to Government civil servants and to extend new Government housing loans. The funds were previously raised through loans but is now replaced with sukuk issuances, consistent with the Government's continuous support in developing the Malaysian sukuk market. 

In the primary market, SPK is issued under the sukuk structure of Commodity Murabahah via the Principal Dealers network. it is tradable under the Bay' Al-Dayn principle. SPK pays out a periodic profit payment on a semi-annual basis and is redeemable at par upon maturity.

Similar to Malaysian Government Securities (MGS) and GII, SPK is classified as RENTAS specified securities and will therefore adhere to all guidelines pertaining to it. Sukuk Perumahan Kerajaan has also been approved by BNM Shariah Advisory Council (SAC) and will be accorded with the following regulatory treatment:

(i)  0% risk weight under the Risk-Weighted Capital Adequacy Framework for conventional banks and the Capital Adequacy Framework for Islamic Banks;

(ii) Class-1 liquefiable assets under the Liquidity Framework, subject to a yield slippage of 2%;

(iii) Eligible collateral for Standing Facility:

(iv) Excluded from Single Customer Credit Limit;

(v)  0% risk charge under the Risk-Based Capital Framework for Insurers; and

(vi) Holdings of SPK in the trading book can be deducted from the eligible liabilities base for the purpose of computing the SRR. For PDs, entire holdings of SPK can be deducted from the eligible liabilities base for SRR computation.

Sukuk Bank Negara Malaysia Ijarah (SBNMI)

SBNMI is issued based on the Al-Ijarah or 'sale and lease back' concept, a structure that is widely used in the Middle East . A special purpose vehicle (SPV) has been established to issue the sukuk Ijarah.

Merdeka Savings Bonds

A bond structure based on Shariah principles with the purpose of providing assistance to retirees who depend primarily on interest income from deposits placed with the banking institutions.

Sukuk 1Malaysia 2010

Sukuk 1Malaysia 2010 which is based on Shariah principles, is an additional investment instrument for Malaysian citizens who are 21 years and above. Sukuk 1Malaysia 2010 has a resaleable feature which provides the flexibility for investors to sell and purchase the sukuk before the maturity date.


For further information, please contact BNMTELELINK at 1-300-88-5465 or visit http://www.treasury.gov.my/ or www.bnm.gov.my/sukuk1Malaysia/

Last Updated : 18/12/2012 17:49 PM