Malaysia’s Prasarana Plans To Sell $1.3 Billion Of Islamic Bonds

Bloomberg, 11 July 2012

Syarikat Prasarana Negara Bhd., the Malaysian state-owned public transport operator, plans to sell 4 billion ringgit ($1.3 billion) of Islamic bonds this year to finance the extension of rail lines in Kuala Lumpur, a company official said today.

“We hope to sell 2 billion ringgit in tenors of 10 to 20 years this quarter as we need the money for the line extension and borrowing costs are low,” Mohd. Zahir Zahur Hussain, group finance director, said in an interview in Kuala Lumpur today. “We will look into selling the second portion of the bonds, probably toward the end of the year.”

Mohd. Zahir said the Shariah-compliant notes will be government-guaranteed and the company hasn’t hired bankers to manage the sale yet. Prasarana last issued sukuk, or securities that pay returns from assets to comply with Islam’s ban on interest, in July 2011. It has total debt of 8.9 billion ringgit, according to data compiled by Bloomberg.

The company’s planned offering comes after Danainfra Nasional Bhd., a government-owned entity formed to help finance the country’s subway, sold 2.4 billion ringgit of sukuk at a record-low premium to local treasuries yesterday. Sales in Malaysia, the world’s biggest market of Shariah-compliant debt, fell 9 percent to 23.4 billion in 2012.