SapuraKencana Petroleum announced that it had on 14 Dec 2015 signed a Murabahah Term financing facility (Islamic Facility) of USD2.1bn, with a consortium of Malaysian as well as regional banks. The Islamic Facility is a 6-year multi-currency facility based on the Shariah principle of Murabahah, and the proceeds raised will be utilised to refinance the group's existing short-term Islamic Facility, which will mature on 7 Feb 2016. (Source : Bursa Malaysia)

Comments: The imminent maturity of the USD2.3bn Islamic Facility had been a dampener on sentiments, but it was widely expected that SapuraKencana will be able to refinance and term out these loans. As such, whilst the announcement is a positive, we believe it is already in the price, and will have no material impact on the trading of the stock.

That being said, we read this announcement as a vote of confidence from the banking community, on SapuraKencana's business model and long-term prospects. We maintain our HOLD rating on SapuraKencana with an unchanged TP of RM2.00, based on 12x CY16 P/E.

Source: Affin Hwang Capital Research - 17 Dec 2015