Bank Negara Malaysia (BNM) issued a Government Investment Issue Sustainability facility worth RM3.5 billion (US$780.07 million) on the 28^th February 2023, a reopening of its landmark first Malaysian ringgit sustainability Sukuk facility issued on the 30^th September 2022.

The facility received RM6.95 billion (US$1.55 billion) through a total of 269 bids. The Malaysian government included 19 principal dealers to accept tender applications for the facility, seven of which were Islamic banks including Bank Islam Malaysia, CIMB Islamic Bank and AmBank Islamic, among others.

The ringgit-denominated sustainability Sukuk facility was initially announced in the 2022 Malaysian budget with the mandate to issue up to RM10 billion (US$2.23 billion)-worth of papers to fund sustainability projects. With the reopening of this facility, the government has issued RM8 billion (US$1.78 billion)-worth of sustainability Sukuk to date.

“This issuance serves as a new benchmark, and showcases Malaysia’s global leadership in Islamic finance, reinforcing its position as the world’s largest Sukuk market,” Tengku Zafrul Aziz, the then-Malaysian finance minister, said while commenting on the first ringgit-denominated sustainability Sukuk.

The net proceeds of the facility will be used by the Malaysian government for Shariah compliant purposes including to finance or refinance development expenditure with a social and green focus, in accordance with the eligibility criteria described under the government of Malaysia’s SDG Sukuk Framework.

The SDG Sukuk Framework allows the government to issue Sukuk to fund social, green and sustainability expenditure. Proceeds from sustainability Sukuk issuances can be channeled to fund both social and green expenditures which contribute to a total of nine SDGs including SDG 15 of sustainable management of natural resources and SDG 11 of clean transportation.

Notably, the framework excludes the use of SDG Sukuk proceeds from funding large-scale hydropower projects with a generating capability over 25 megawatts.

With no definite deadline for the issuance of the full amount of ringgit-denominated sustainability Sukuk announced in the 2022 budget, it remains to be seen when the government will issue the remaining RM2 billion-worth of Sukuk. Notably, however, the government made no further commitments for the issuance of sovereign sustainability Sukuk under the revised 2023 Malaysian budget.

Malaysia’s second sustainability ringgit Sukuk RM3.5 billion (US$780.07 million) 30th September 2022
Summary of terms and conditions
Issuer	Malaysian government
Size of issue	RM3.5 billion (US$780.07 million)
Mode of issue	Competitive multiple price auction
Purpose	To finance development expenditure with a social and green focus.
Tenor	15.5 years
Profit Rate	4.66%
Payment	Semi-annually
Currency	Malaysian ringgit
Maturity date	The 31st March 2038
Islamic principal dealer(s)	1. Affin Islamic Bank 2. AmIslamic Bank 3. Bank Islamic Malaysia 4. CIMB Islamic Bank 5. Hond Leong Islamic Bank 6. Maybank Islamic Bank 7. RHB Islamic Bank
Principal dealer(s)	1. AmBank 2. CIMB Bank 3. Citibank 4. Hong Leong Bank 5. HSBC Bank Malaysia 6. Maybank 7. OCBC Bank (Malaysia) 8. Public Bank 9. RHB Bank 10. Standard Chartered Bank Malaysia 11. JPMorgan Chase Bank 12. United Overseas Bank (Malaysia)
Governing law	Malaysian law
Islamic structure	Murabahah
Underlying asset	Shariah compliant assets
Face value/minimum investment	Face value: RM1 million (US$222,878) Minimum investment: RM5 million (US$1.11 million)