KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) is said to be in the midst of selling up to RM8.4 billion worth of sukuk, the largest globally so far this year.
A report in Bloomberg yesterday said the sovereign wealth fund is seeking approval from the Securities Commission (SC) on the said issuance and has chosen AmInvestment Bank Bhd as the sole lead arranger and manager.
Proceeds from the issuance, which would be sold through 1MDB’s 70 per cent-owned subsidiary Jimah East Power Sdn Bhd, would be used to finance the construction of a 2,000-megawatt power plant in Negri Sembilan.
1MDB initially sought to raise RM9.6 billion stateearlier this year through a listing of its energy assets, which at that time was set to be the nation’s second-biggest initial public offering (IPO).
“1MDB expects to use the proceeds to fund future business growth, for partial repayment of its outstanding debt and general corporate purposes,” the company had said.
The plan was delayed when 1MDB failed to submit an application to the SC by its deadline.
“It would appear that 1MDB is looking at new ways to fund the Jimah power plant after failing to list its IPO,” said an industry player who did not want to be named.
“It is difficult to ascertain whether or not 18this sukuk will be beneficial to the firm in the long run without looking at the structure but it would be safe to say that 1MDB is being rather resourceful in getting the funding it needs for Jimah.”
1MDB has an outstanding debt of RM30.6 billion, according to data compiled by Bloomberg.
Emails to 1MDB and AmInvestment Bank’s corporate communication departments were not immediately answered at press time.
The sukuk market in Malaysia is the largest in the world at an estimated US$163.5 billion (RM530 billion) as of the end of 2013, according to data from Asian Development Bank’s Asia Bond Monitor released in March this year.