S&P gives Malaysia Wakala Sukuk A-

S&P said it assigned its preliminary A- issue rating to the planned dollar-denominated sukuk to be issued by Malaysia Wakala Sukuk Bhd.

Malaysia Wakala is a special-purpose entity formed to act as a financing vehicle for Malaysia’s government. Malaysia Wakala will enter, among other contracts, into a voucher purchase agreement, a purchase undertaking and a wakala agreement with the government of Malaysia.

“The preliminary rating on the proposed sukuk reflects the foreign-currency rating on Malaysia,” the agency said in a press release.

The transaction fulfills S&P’s conditions for the sukuk to be at the same level as the sponsor. Malaysia will ensure timely payment, the sukuks are irrevocable, they will rank equally with the government’s general obligations, Malaysia will cover the transaction costs and S&P said it sees the risk of a total loss as remote.

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