Tuesday November 6, 2012
Ministry said planning RM5.3bil sukuk to buy aircraft
KUALA LUMPUR: The Finance Ministry plans to sell as much as RM5.3bil of Islamic bonds under a 20-year programme to help the nation’s loss-making carrier buy new aircraft, according to two people familiar with the deal.
The state-guaranteed notes would be sold by Turus Pesawat Sdn Bhd, a special-purpose vehicle, with marketing starting this week, said the people who declined to be named because the information is private. Malaysian Airlines (MAS) announced in May it planned to lease six Airbus A380s and two A330s for RM5.3bil that would be purchased by the Government.
The company is seeking to win back business from budget carrier AirAsia Bhd by expanding its fleet after reporting losses for six straight quarters through June. MAS sold RM1bil of Islamic bonds with no fixed maturity in June via a private placement at a yield of 6.9%t. It also issued RM500mil in September at the same rate.
“Demand for the notes will be robust because of the government guarantee,” Chan Cheh Shin, who manages RM850mil as head of Islamic debt at OSK-UOB Islamic Fund Management Bhd, said in an interview. “I will buy as long as the yields are above sovereign debt.”
Ringgit-denominated government securities due in 2017 that don’t comply with Islam’s ban on interest yielded 3.24% yesterday, while bonds maturing in 10 years offered 3.45%, according to prices from Bursa Malaysia.
Borrowing costs on global syariah-compliant bonds, or sukuk, were at a record low of 2.85% at the end of last week, the HSBC/Nasdaq Dubai US Dollar Sukuk index shows. – Bloomberg