Government Investment Issue (GII)

 

Features

  • GII is issued by the government of Malaysia to finance the country’s development programme
  • GII is long-term non-interest-bearing Government securities based on Islamic principles for funding developmental expenditure
  • Effective from 22 July 2013, GII is issued based on Murabahah concept.
  • The GII issued prior to 22 July 2013, is based on Bai Al-Inah contract, is a trust certificate, arising from sell and buy back of asset in Islamic finance
  • Murabahah contract is essentially a certificate of indebtedness arising from a deferred mark-up sale transaction of an asset, such as commodity (mainly crude palm oil), which complies with Shariah principles. This new issuance under Murabahah contract will involve commodity transactions to create indebtedness between the sukuk issuer and the investors
  • GII is issued through competitive bidding auction by Bank Negara Malaysia on behalf of the Government.
  • The GII issuance programme is preannounced in the auction calendar with issuance size ranging from RM2 billion to RM5 billion and original maturities of 3-, 5-, 7-, 10-, 15- or 20-year.
  • The Government of Malaysia with the advice by Bank Negara Malaysia, issued first Profit-Based GII 5 -year tenure of RM2 billion on 16 March 2005. It is coupon bearing paper which the Government pay half yearly profit to the investors
  • GII is assigned with no credit risk as it is issued by the government.
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GII-Murabahah2013

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