Malaysia`s Khazanah in S$1.5 bln Islamic bond sale

Malaysian state investor Khazanah on Tuesday sold S$1.5 billion (USD1.1 billion) in sukuk, Singapore's largest Islamic bond issue, which could help ignite interest in the city state's fledging sukuk market.

The sale comes a week after Khazanah trumped India's Fortis Healthcare in a takeover battle for Singapore's Parkway Holdings in a deal that could cost the state firm S$3.5 billion.

This is the biggest sukuk sale in Singapore, where Islamic finance has been slow to take off because of neighbouring Malaysia's dominance in the fast-growing asset class and a lack of domestic investor interest in the city-state.

Khazanah said it had sold S$600 million in five-year sukuk at 2.615% and S$900 million in 10-year sukuk at 3.725%, confirming an earlier Reuters report.

The transaction drew a demand of 4.3 times book size enabling Khazanah to upsize the issue from the initial offer size of S$1 billion, the state investor said in a statement.

The deal attracted 78 local and international investors comprising financial institutions, asset management firms, statutory bodies and insurance companies from Singapore, Malaysia, Hong Kong, Brunei and Europe, it said.