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Tuesday, June 18, 2024

Launch Partners

Case study: Malaysian government concessionaire MYEG’s social Sukuk

Digital services company MY EG Services (MYEG) has on the 17th January 2023 issued a five-year Islamic medium-term note (IMTN) worth RM100 million (US$23.07 million) under its Sustainability Financing Framework.

MYEG is the concessionaire for Malaysia’s Electronic Government Multimedia Super Corridor flagship application. It builds, operates and owns the electronic channel to deliver services from various government agencies, including the Road Transport Department, the Immigration Department and the Ministry of Health, to Malaysian citizens and businesses. It has integrated blockchain technology into its offerings to stay ahead of the digital curve.

The Sukuk issuance is the third series issued under MYEG’s RM1 billion (US$230.68 million) Sukuk Wakalah program lodged on the 17th October 2022. The paper carries a coupon rate of 5.75% and is arranged by CIMB Investment Bank and HSBC Amanah as the joint lead arrangers.

The program has been rated ‘AA-IS’ by MARC Ratings with MYEG’s Sustainability Financing Framework receiving a ‘Gold’ impact assessment by the rating agency.

“Proceeds raised from the respective financing instruments will be utilized to support the transition towards a more inclusive, resource-efficient economy that is aligned to the UN SDGs and circular economy concept, with projects focusing on foreign worker accommodations and blockchain developments,” MARC Ratings noted.

The proceeds from the sustainable Sukuk will be used for foreign workers’ accommodation, among other purposes, a spokesperson from MYEG told ISFI.

Under the Sustainability Financing Framework, Sukuk proceeds will be channeled to social and green projects contributing to accessibility to quality healthcare, accessibility to affordable and quality basic infrastructure, socioeconomic advancement and empowerment and circular economy-adapted products, production technologies and processes.

Also under its eligible projects is a joint venture with China-based Bubi Technologies to develop Zetrix, a Layer-1 blockchain platform to facilitate the regional comprehensive economic partnership, a free trade agreement comprising 15 member countries.

According to MYEG, the blockchain platform infrastructure project will build supernodes globally and will ensure data compatibility with China’s national blockchain infrastructure, enabling multiple applications including in the area of global cross-border supply chain financing and traceability.

Zetrix launched its pilot project for its cross-border trade financing solution, Zetrix TradeFi, with AmBank Group, which includes its Islamic banking arm AmBank Islamic, in October 2022.

According to the rating agency, Zetrix’s supply chain traceability solutions will promote demand for climate-friendly products through enabling the verification and tracking of sustainably-produced products. Beginning its operations in 2000, MYEG is listed on Bursa Malaysia’s Main Board with a four-star rating on Bursa Malaysia’s ESG rankings.


MYEG’s series three Sukuk

RM100 million (US$23.07 million)


17th January 2023
Summary of terms and conditions
Issuer
MY EG Services
Size of issue
RM100 million (US$23.07 million)
Mode of issue
Private placement, bought deal, bookbuilding
Profit rate
5.75%
Tenor
Five years
Payment
Semi-annual
Currency
Malaysian ringgit
Maturity date
17th January 2028
Lead arranger(s)
CIMB Islamic Bank and HSBC Amanah
Principal advisor(s)
CIMB Islamic Bank and HSBC Amanah
Sustainability structuring agent(s)
CIMB Islamic Bank and HSBC Amanah
Governing law
Malaysian law
Legal advisor(s)/council
Zaid Ibrahim & Co
Islamic structure
Wakalah Bi Istithmar, Murabahah (via Tawarruq arrangement)
Listing
Bursa Malaysia
Underlying asset
Shariah compliant commodities
Rating
‘AA-IS’ (MARC Ratings)
Shariah advisor(s)
Shariah advisory boards of CIMB Islamic Bank and HSBC Amanah
Tradability
Yes
  • Companies in the Article
  • myeg

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