Malaysia has started marketing its first sustainability Sukuk, adding to a growing number of countries turning to debt financing for environmental projects.
The Southeast Asian nation is marketing US dollar-denominated Islamic finance securities in 10-year and 30-year parts, and the shorter tenor is a sustainability offering, a person familiar with the matter said.
The deal might price as soon as today, said the person, who asked not to be identified as the details are private.
Sustainable debt issuance rose 29 percent last year to a record US$732 billion, BloombergNEF figures showed.
Indonesia sold green debt that complies with religious principles in 2018, making it the first country in the world to issue such securities, a UN Development Programme report said.
“Demand for ESG or sustainability-linked bonds continues to gain traction while there is still a limited supply” of such issuances from Southeast Asia, said Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore. “Adding the sustainability label helps widen further the investor base.”
Malaysia is also an infrequent issuer in overseas debt markets, last selling US dollar debt in 2016. The sovereign’s existing US currency notes have longer duration, which made them vulnerable to a sell-off last quarter as yields spiked, but they have since recouped some losses as interest rates retreated.
Malaysia has been tackling the effects of the COVID-19 pandemic, and Malaysian Prime Minister Muhyiddin Yassin last month unveiled a 20 billion ringgit (US$4.86 billion) stimulus package that included discounts on power bills, tax breaks and cash aid to the poor.
The nation’s GDP could expand 6 percent to 7.5 percent this year, Malaysia’s central bank said last month.
That is potentially slower than its earlier projection of 6.5 percent to 7.5 percent growth, but ahead of many of its neighbors.
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