SME Bank, an agency under the Ministry of Entrepreneur Development and Cooperatives (MEDAC), in its maiden Sustainability Sukuk Wakalah Programmes received a positive response in their book building exercise when it registered a final order of RM1.78 billion which translates to 3.56 times bid-to-cover (BTC) from the target issuance of RM500 million on 21 July 2021.

Aria Putera Ismail, SME Bank’s Group President/Chief Executive Officer said, “Taking into account of the challenging market situation, the Bank managed to price the issuance at a very competitive profit rate of 3.10%. Interestingly, this Sustainability Sukuk has received an overwhelming demand not only from domestic institutional investors, but also from foreign asset managers. The investors’ profile is quite diversified and well supported by financial institutions, fund management companies, insurance companies and government linked companies. This high demand is also driven by awareness movements within and outside the country that continue to support a balanced and sustainable development; which is the main focus of the SME Bank Sustainability Sukuk.”

Aria said, “With the issuance of the Sustainability Sukuk, the Bank will now be able to offer more innovative financing solutions for SMEs and continue to play our countercyclical role to ensure their success and becoming the nation’s engine of growth that not only contributes positively to the GDP, creating employment but ultimately, positive spill over to society and the environment.”

In general, the banking sector, being an entity that is highly integrated with all aspects of economic activities can act as the game changer in promoting awareness amongst the SMEs on the importance of applying the principles of Environment, Social and Governance (ESG) in their business operations. This is significant in view that ESG is already considered the norms internationally and our SMEs should not be left behind if they want to compete globally,” added Aria.

The first phase in SME Bank’s ESG journey is creating awareness amongst SMEs through financing facilities to finance projects that meet the ESG requirements. The second phase is to conduct series of engagements to educate SME entrepreneurs not only to use financing to meet their ESG needs, but also to apply the ESG elements in their business operations in general.

The SME Bank Sukuk Wakalah Programmes is made up of Islamic Medium Term Notes (IMTN) Programme of up to RM3.0 billion (which include the Sustainability Sukuk) and Islamic Commercial Papers (ICP) Programme of up to RM1.0 billion with a combined limit in nominal value of up to RM3.0 billion. This first Non-Government Guarantee Sukuk Wakalah Programmes for SME Bank have been accorded AAA ratings by MARC and also Gold standard for its Sustainability Sukuk Framework, its highest rating.