Trade Sukuk Bond On The Stock Market

Our "AhJib Gor" launching the first Malaysia Exchange Traded Bonds and Sukuk (ETBS)

If you saw my posts over the years, I bought the guaranteed 5% sukuk bonds from the government around 2009, aka 4 years ago. At that time, there was a mad rush to buy these sukuk bonds because it was a guaranteed 5% per annum return. So literally, I had to queue like crazy.

See here:

http://www.knowthymoney.com/2009/04/sukuk-bonds-rm25billion-to-govt-coffers.html

And in early 2012, I got my guaranteed principal back after 3 years :)

http://www.knowthymoney.com/2012/05/got-back-my-5-sukuk-simpanan-rakyat.html

And now, the government thru now needs money to fund the MRT project. So they will start with RM100 million sukuk that can be traded over the stock market like normal shares over 10 years. However, the yield/price will fluctuate over time, unlike my initial sukuk investment which guarantees a 5% per annum return AND if I remember correctly can withdraw my former 5% government sukuk without any losses or penalty on my principal.  (since the sukuk price is static)

Since this is a public traded Sukuk, you might lose money/principal because the yield/price will fluctuate over time based on the supply and demand mechanism of the stock market. See some calculation provided inside the prospectus below. I extracted it out.

Initial assumption is that the yield is a minimum 3.70% per annum with semi annual payouts. Bear in mind this figure is an estimation. You will know the final value on the listing date.

So if you want to diversify your wealth, be the first to buy the sukuk by applying it like an IPO. But my track history with IPO is very very bad. Never got balloted any IPOs before. I have higher chances of getting a sukuk if I had to queue up even though I hate to queue. lol.

Just have alook at my experiences with IPO

http://www.knowthymoney.com/2012/02/how-to-applying-ipo-through-cimbclicks.html

http://www.knowthymoney.com/2009/10/how-to-apply-maxis-ipo.html

Good luck to those applying the IPO.

Some info on DanaInfra Nasional Berhad the issuer of the sukuk.

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

 Separate fund raising activity from infrastructure construction;

 Develop the most cost competitive, efficient and sustainable financing models; and

 Maintain Government’s fiscal position through the most competitive financing and timely disbursement of

    funds.

Consequently, DanaInfra was established on 3 March 2011 as a company wholly-owned by Minister of Finance, Incorporated with the main objective to undertake funding for infrastructure projects assigned by the Government.

As a funding vehicle for certain infrastructure projects, DanaInfra has a role and mandate to:

 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; and

 Identify strategic investors.

Take a look at the calculation based on the sheet here. 

Daud is an investor who had invested RM100,000  in a 10-year DanaInfra Retail Sukuk. At the time of  subscription, the Profit Rate of DanaInfra Retail Sukuk was 3.74% per annum and the initial price was RM100.

He can either:

1) Hold DanaInfra Retail Sukuk until maturity;

2) Sell DanaInfra Retail Sukuk in full / partial at a premium on a business day at anytime during the 

tenure; or

3) Sell DanaInfra Retail Sukuk in full / partial at a discount on a business day at anytime during the 

tenure.

Case Study 1 – Hold until maturity

If Daud invests in DanaInfra Retail Sukuk and holds  them to maturity, his investment returns can be 

calculated as follows:

Semi-annual profit payment = RM100,000 x (3.74% / 2)

= RM1,870 

Total profits = RM1,870 x (2 period per year x 10)

= RM37,400

Total investment proceeds = RM37,400 + RM100,000

= RM137,400

Investment rate of return (*) = Total profits / (Face Value x holding period) 

(per annum) = RM37,400 / (RM100,000 x 10 years)

= 3.74% per annum

Case Study 2 – Sell at a premium

If Daud sells his investment after a 90-day holding period, when the price has increased to RM103 from

the initial price of RM100, his investment returns can be calculated as follows:

Selling proceeds = Face Value x (Selling price / Initial price)

= RM100,000 x (RM103 / RM100 )

= RM103,000

Gain = RM103,000  – RM100,000

= RM3,000.00

Investment rate of return (*) = Gain / (Face Value x holding period / number of days in a year)

(per annum) = RM3,000 / (RM100,000 x (90 days / 365 days))

= 12.17% per annum

Case Study 3 – Sell at a discount

If Daud sells his investment after a 90-day holding period, when the price has decreased to RM98.00

from the initial price of RM100.00, his investment returns can be calculated as follows:

Selling proceeds = Face Value x (Selling price / Initial price)

= RM100,000 x (RM98 / RM100 )

= RM98,000

Loss = RM98,000 – RM100,000

= -RM2,000

Investment rate of return (*) = Loss / (Face Value x holding period / number of days in a year)

(per annum) = (-RM2,000 ) / (RM100,000 x (90 days / 365 days))

= - 8.11% per annum

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