KUALA LUMPUR: Bank Rakyat, the country's biggest Islamic cooperative bank, today announced the launch of a RM500 million three- and five-year sukuk musharakah, the bank's second Islamic bond issuance.

The issuance of the RM500 million sukuk is part of the proposed Islamic medium-term notes programme of up to RM9 billion in nominal value issued via an appointed funding conduit, Imtiaz Sukuk II Bhd.

Bank Rakyat Managing Director Datuk Mustafha Abd Razak said the sukuk issuance will provide the bank with a more diversified and stable medium- and long-term funding and allow Bank Rakyat to achieve a stronger and more resilient balance sheet.

"The fund raised from this exercise will be utilised for the Bank's working capital and general corporate purposes. Our robust performance and sound financial profile will bode well with investors," he said in a statement here.

RAM Ratings Sdn Bhd has assigned a corporate rating of AA2 for the issuance of the medium-term Islamic notes.

The strong rating reflects Bank Rakyat's credit strength as the country's largest Islamic cooperative bank with good growth record and sound financial standings.

The issuance will be in tranches of RM200 million raised under the three-year notes with annualised return of 4.30 per cent and RM300 million under the five-year term notes with annualised return of 4.45 per cent.

Last year, Bank Rakyat's maiden RM1 billion issuance of Islamic medium-term notes was oversubscribed by 2.05 times.

It was the country's first sukuk issuance by a cooperative bank on a stand-alone basis.

Maybank Investment Bank Bhd and CIMB Investment Bank Bhd have been appointed as the joint lead arrangers and joint lead managers for this RM500 million issuance exercise.

Bank Rakyat is the biggest Islamic cooperative bank in Malaysia with assets totalling RM83.8 billion as at Sept 31, 2013.

For the first nine months of 2013, the Bank recorded a profit before tax and zakat of RM1.63 billion. -- Bernama