Business

Thursday January 31, 2013

MRT RM300mil retail sukuk funding oversubscribed

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


KUALA LUMPUR: The retail sukuk issued to fund the construction of the country's Sungai Buloh-Kajang mass rapid transit (SBK Line) has been oversubscribed by O.61 times, giving a small boost to the funding needs of the project.

This is the country's first retail sukuk offering and was made by DanaInfra Nasional Bhd, a unit under the Finance Ministry set up in 2010 to facilitate the funding of the country's biggest infrastructure development, the Sungai Buloh-Kajang mass rapid transit (SBK Line) project, with a total estimated cost of RM23bil.

The oversubscription represents RM484.3mil in value from a total of 1,424 applications for the RM300mil retail sukuk offering, according to a statement from Malaysian Issuing House on behalf of DanaInfra yesterday.

On Jan 12, DanaInfra extended the offer period for the retail sukuk by a week to Jan 25 and fixed the indicative profit rate at 4% per annum from 3.7% previously.

Another RM1.3bil portion of this sukuk tranche is being issued to institutional over-the-counter trading for 10-year papers and the book building for that should be finalised by today. This means that, in total, DanaInfra is raising RM1.5bil for the SBK Line year-to-date.

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

Meanwhile, Mass Rapid Transit Corp Sdn Bhd (MRT Corp) chief executive officer Datuk Azhar Abdul Hamid told StarBiz that the MRT project that had been gaining traction on the ground, was going to need in excess of RM5bil for its works this year alone.

“We need an average of RM400mil a month now as work is in progress as opposed to the start-up stage.

“We now have about 14,000 people involved in the project,” he said.

Azhar added that the project would need an average of about RM5bil a year until completion in 2017.

StarBiz previously reported that the sukuk issuances to fund the MRT project should ideally be on a quarterly basis, but the amount would depend on the needs of the MRT project over that specific period.

The success of this first retail sukuk also gives an indication that DanaInfra will be interested to include more retail sukuk portion in future issuances.

The SBK Line, which is the first line out of the proposed three MRT lines, is made up of two phases.

The first phase is from Sungai Buloh to Semantan, while the second is from Kajang to Taman Maluri.

The first phase is expected to be operational by December 2016, and the second by June 2017.

MRT Corp, fully owned by the Ministry of Finance Inc, and set up to be the developer and asset owner of the MRT project. has been awarding tenders for SBK Line since the fourth quarter of 2011. To date, it has awarded in excess of RM20bil worth of advance, civil and systems works.

The DanaInfra retail sukuk issuance and listing on Bursa Malaysia is targeted for Feb 8 and is priced at RM100 each and bundled in lots of 10 for trading and the minimum subscription is RM1,000.

All notices of allotment for successful applicants will be mailed on or before Feb 7.

Meanwhile Bernama reported that a total of 44 work packages, worth RM19.5mil, were awarded to Class G1, G2, G3 bumiputra contractors for the SBK Line project.

In announcing this yesterday, Azhar said the contracts were part of the Government's target of achieving 43% participation by bumiputra contractors in the nation's largest infrastructure project.

He said the balloting was the second to be held involving 541 applicants.

The first balloting was held at the end of last year where nine contractors were awarded RM7.5mil worth of contracts.

MRT Corp has allocated 250 work packages worth RM200mil specially for bumiputra contractors.

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