Will the government honour its RM27.5 billion sukuk guarantee?

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The government will honour its RM27.5 billion sukuk guarantee for Urusharta Jamaah Sdn Bhd (UJSB).

Finance Minister II Datuk Seri Amir Hamzah Azizan has confirmed that the government will uphold its guarantee for the sukuk issued by Urusharta Jamaah Sdn Bhd (UJSB), a special purpose vehicle established to manage assets transferred from Lembaga Tabung Haji (TH). This assurance addresses concerns regarding the government's commitment to its financial obligations.
UJSB's Role and Sukuk Restructuring

Urusharta Jamaah Sdn Bhd (UJSB) was incorporated on December 14, 2018, with the specific mandate of managing assets previously held by Lembaga Tabung Haji (TH). To ensure timely payments for the RM27.5 billion sukuk issued by UJSB, the government undertook a restructuring of TH’s original zero-coupon bond sukuk. This restructuring transformed the sukuk into instruments that provide annual profit distributions, thereby facilitating the meetment of payment obligations.
Original Sukuk Structure and Returns

The sukuk initially issued in 2018 had a principal value of RM19.6 billion. By its maturity, its valuation had increased to RM27 billion, with the RM8 billion difference representing the returns accrued to TH. This structure meant that returns were realised solely at the sukuk's maturity.
Benefits of the Restructuring

The restructuring of the sukuk has resulted in enhanced hibah payments and improved returns for TH when compared to investing in conventional government-issued securities. Specifically, Sukuk 1 and Sukuk 2 were converted from zero-coupon bonds to sukuk bearing annual coupons, offering a profit distribution rate of 3.86%. Furthermore, Sukuk 3 provides Tabung Haji with an approximate annual return of RM440 million, a figure deemed sufficient and better than prior arrangements. This aligns with recommendations from the Royal Commission of Inquiry (RCI) to convert returns from zero-coupon bonds into cash payments.

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Will the government honour its RM27.5 billion sukuk guarantee?

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