TH's RM11.5 Bln Sukuk Not A New Bailout - Nungsari
By Harizah Hanim Mohamed
KUALA LUMPUR, Aug 22 (Bernama) -- The RM11.5 billion sukuk issued by Urusharta Jamaah Sdn Bhd (UJSB) is a rollover of the maturing sukuk arising from the original Tabung Haji (TH) bailout, rather than a new one, said economist Dr Nungsari Ahmad Radhi.
Sukuk are Islamic financial certificates, similar to conventional bonds, but structured to comply with Shariah law.
UJSB is a special-purpose vehicle under the Ministry of Finance (MOF), established to acquire underperforming assets and strengthen the financial standing of TH.
Nungsari described the sukuk issuance as a "rollover of the maturing sukuk".
"Instead of paying off the sukuk, UJSB reissues the sukuk," he told Bernama.
UJSB's Series 1 sukuk, which matured on May 29, 2026, had a redemption value of about RM12.5 billion.
Of this, RM965 million was settled through the transfer of a 0.63-hectare parcel of land in Tun Razak Exchange (TRX) and 8,756.92 hectares of plantation land in Sarawak.
The remaining RM11.5 billion was refinanced through a new 10-year sukuk carrying a coupon rate of 3.825 per cent, effectively extending the existing obligation that matured in May this year to May 2036.
Nungsari said, in principle, if sufficient value could eventually be recovered from the assets transferred to UJSB, it could be used to redeem the outstanding sukuk.
*By right, if the assets transferred become RM20 billion, that can redeem the sukuk outstanding.
"So, the amount of sukuk outstanding is an indicator of how well things have turned out," he said.
However, Nungsari said there is a possibility that UJSB may not be able to recover the full value required to meet the obligation.
"I think it is unlikely that they can recover everything. There is the possibility that the whole shortfall may not be recovered. In which case, MoF bears that risk," he said.
Explaining the original bailout, Nungsari said TH's assets at the time were about RM10 billion short of its liabilities, which meant it was unable to pay hibah.
"(Hence), the transfer of some of its assets to UJSB, in exchange for its sukuk, is the MOF’s bailout of TH," he said.
Nungsari said, in simple terms, TH assets valued at about RM10 billion were exchanged for sukuk worth about RM20 billion, strengthening TH's balance sheet and enabling it to address the shortfall.
"With that RM20 billion sukuk as part of its assets, TH's assets exceeded its liabilities then, enabling it to pay hibah.
"TH enjoys coupons from UJSB, while UJSB/MOF bears the risks associated with those assets, including the RM10 billion shortfall in value," he said.
He said UJSB would continue its efforts to recover value from the transferred assets while servicing the sukuk, with any eventual shortfall in the recovery ultimately borne by the MOF.
The RM11.5 billion issuance therefore represents a rollover of the existing sukuk, while the original arrangement enabled TH to strengthen its balance sheet and resume paying hibah.
-- BERNAMA