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Friday, 3 April 2015

Malaysia plans to issue dollar sukuk to repay 1MDB debt

Malaysia's government will begin meeting investors on Monday to discuss a potential dollar-denominated sovereign sukuk, as it looks to repay some of the debt raised by its struggling state fund 1MDB.

The fund's debt of over $11 billion is weighing on Malaysia's sovereign credit rating and has also been a factor contributing to ringgit weakness in recent months.
The government has appointed CIMB, HSBC and Standard Chartered to arrange meetings in Kuala Lumpur on Monday, Singapore on Tuesday, Hong Kong on Wednesday, Abu Dhabi and Dubai on Thursday, London on Friday and New York the following Monday, a document from lead arrangers showed.
No details on the size and tenor of the issue were provided, but sources with knowledge of the deal previously told Reuters that it would be up to $2 billion with a maturity of more than five years.
The Malaysian government would use the proceeds for sharia-compliant purposes including the redemption of 1MDB's $1.25 billion sukuk that matures in June, the document showed.
Prime Minister Najib Razak this month ordered the auditor general to examine the fund's accounts, after allegations of corruption and mismanagement.
The fund, which owns real estate and power assets, will eventually be dismantled and most of its assets will be disposed of, sources have told Reuters.

A draft prospectus seen by Reuters showed the bond issue would use the wakala format, in which certificates are issued by an originator to purchase assets that are given to an agent for management.
(Reuters / 02 April 2015)
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