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Thursday, 5 February 2009

Malaysia: PLUS to sell RM1b Islamic bonds

PLUS Expressways Bhd, Malaysia’s largest toll-road operator, plans to sell RM1 billion (US$277 million) of Islamic bonds to help repay maturing debt and finance expansion projects.

Bank Islam Malaysia Bhd and CIMB Islamic Bank Bhd will help sell the Syariah-compliant bonds, known as sukuk, PLUS managing director Noorizah Abd Hamid said in a phone interview from Kuala Lumpur today.

The sukuk will have maturities of at least five years, Noorizah said. The company aims to raise RM350 million “in the coming months” to refinance a loan maturing in June and to borrow another RM200 million in the second half of the year to fund a road project in Indonesia, she said.

Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, said yesterday that it plans to raise as much as US$100 million to invest in sukuk, projecting annualised returns of 12 per cent for investors over four years after yields on the securities jumped. Sukuk sales will probably fall for a second year this year after hitting a record US$30.8 billion in 2007, according to CIMB Group Bhd.

PLUS favours Islamic over conventional debt so it can remain in the Dow Jones Islamic Index of Syariah-compliant companies, Noorizah said. Sukuk are typically asset-based securities and pay a profit rate to investors instead of interest, which is banned by Syariah law.

PLUS is in talks to acquire more local and overseas road projects which would require more debt, Noorizah said, declining to be more specific. - Bloomberg
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