Societe Generale SA delayed a planned debut offering of Islamic bonds in Malaysia, two people familiar with the matter said today.
France’s third-largest banking group by assets was set to sell 150 million ringgit ($47 million) of five-year Shariah-compliant debt to yield 4 percent to 4.25 percent last week, one of the people said on July 25, asking not to be named because the information is private. The sale would have been the first under a 1 billion ringgit multi-currency sukuk program, rated the highest investment grade by RAM Rating Services Bhd., that was started in June.
Yields on Malaysia’s top-rated corporate bonds that don’t comply with Islam’s ban on interest have climbed to a four-year high on speculation the central bank will raise borrowing costs. Bank Negara Malaysia increased its benchmark rate this month for the first time since May 2011 to rein in inflation.
Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund, canceled plans to sell as much as $750 million of Islamic bonds exchangeable into shares of state-owned power producer Tenaga Nasional Bhd. in June because pricing didn’t meet expectations, one person familiar with the matter said at the time.
Average yields on conventional AAA-rated five-year corporate debt in Malaysia have climbed 48 basis points to 4.22 percent since they reached a 10-year low in June last year and are now at the highest level since July 2010, according to a central bank index.
SocGen will seek to re-sell the bonds at an appropriate time, said one of the people who spoke today, without being specific.
The Paris-based company’s euro-denominated conventional securities due in October 2019 yielded 2.11 percent yesterday, the lowest since the debt was sold in 2007, data compiled by Bloomberg show.
The cost of one-year interest-rate swaps in Malaysia climbed three basis points, or 0.03 percentage point, this month to 3.7 percent. That compares with the central bank’s benchmark policy rate of 3.25 percent after it increased it by 25 basis points on July 10.