UOB Malaysia has raised 750 million ringgit ( US$176.27 million ) after upsizing its Basel III-compliant tier-2 subordinated Islamic medium-term notes amid robust investor interest.

The offering is part of the bank’s 5 billion ringgit sukuk wakalah programme, established in January 2024 under the Shariah principle of Wakalah Bi Al-Istithmar.

Initially targeted at 500 million ringgit, the tier-2 sukuk wakalah was raised to 750 million ringgit following strong demand from a diverse group of more than 20 high-quality investors, including insurance companies, fund managers, government-linked investment companies, banks, and private banks.

The issuance was fixed at a yield of 3.85% per annum, representing a spread of 36bp above the seven-year benchmark Malaysian Government Securities ( MGS ). The sukuk is scheduled to be issued on July 3 and matures on July 3 2037 with an optional redemption on July 2 2032.

"We are pleased that the second tranche of our sukuk wakalah programme has been met with such strong investor interest, following the success of our debut issuance last year,” says UOB Malaysia chief executive officer Ng Wei Wei.

“The upsized issuance reflects continued confidence in UOB Malaysia’s credit strength and long-term strategic direction. It also reflects the depth and maturity of Malaysia’s Islamic debt capital market, which continues to attract a diverse and high-quality investor base. This outcome affirms both the resilience of Malaysia’s financial system and the enduring strength of the country’s strong economic fundamentals."

Rated AA1 by RAM Ratings, the tier-2 sukuk wakalah is intended to qualify as UOB Malaysia’s tier-2 capital on a consolidated basis under Bank Negara Malaysia’s capital adequacy framework for Islamic banks ( capital components ).  

UOB Malaysia and CIMB Investment Bank acted as the joint lead managers for the transaction.