Business

Wednesday January 16, 2013

MRT project in for another round of sukuk financing

By SHARIDAN M. ALI
sharidan@thestar.com.my


<B>Kamal:</B> The upcoming issuance will likely include a retail sukuk portion of up to 20% of the total issuance. Kamal: The upcoming issuance will likely include a retail sukuk portion of up to 20% of the total issuance.

KUALA LUMPUR: The country's biggest infrastructure project the Sungai Buloh-Kajang My Rapid Transit (MRT) is in for another big round of financing.

Finance Ministry unit Prokhas Sdn Bhd, the financial adviser of DanaInfra Nasional Bhd established in 2010 to facilitate the funding of large infrastructure projects by the Government, revealed that the next sukuk issuance to finance the mammoth development is expected as early as March and slated to be significantly larger that the current RM1.5bil sukuk series being issued this month.

The RM23bil MRT first-line development, incidentally, is Danainfra's maiden project.

According to Prokhas chief operating officer Datuk Kamal Mohd Ali, this upcoming issuance (or series three), would likely include a retail sukuk portion of up to 20% of the total issuance.

It is understood that this issuance should be bigger, as it was slated to finance the tunnel-boring machines (TBMs) that would arrive from Germany and China. The first of the 10 TBMs is expected to arrive next month, with tunnelling works starting by May.

It has been reported that MRT Corp has ordered eight TBMs from German-based manufacturer Herren Herrenkncht AG, with another two from China Railway Tunnelling Equipment Co Ltd, bringing the whole order to RM500mil.

The first series of the commercial papers/medium-term notes programme issued in July 2012 for RM2.4bil was purely for institutional over-the-counter (OTC) trading, with tranches issued for seven, 10, 12 and 15 years.

The second series is being issued this month for RM1.5bil with RM1.2bil institutional OTC inclusive of the first retail sukuk offering of RM300mil for 10-year papers.

“Ideally, we would have sukuk issuances on a quarterly basis but the amount would depend on the needs of the MRT project over that specific period,” he told reporters over a lunch meeting yesterday.

MRT Corp has been awarding tenders for the MRT project since the fourth quarter of 2011. To date, it has awarded almost RM20bil worth of advance, civil and systems works.

There are about 20 more tender packages to be awarded, and in total, the balance of the award should not exceed RM3bil, bringing the construction cost of the first MRT line to about RM23bil.

On the retail sukuk portion being the first in the world and a new asset class for the public to invest, Kamal was hopeful it would be oversubscribed by at least one or two times.

Danainfra's retail sukuk, guaranteed by the Government, was created as part of its efforts to broaden its investor base by allowing participation of retail investors to fund the MRT project.

The date of issuance and listing on Bursa Malaysia is targeted for Feb 8, with the opening offer date on Jan 8 and its closing date on Jan 18.

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