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Cypark Ref issues innovative SRI Sukuk

Cypark Ref issued a 19-tranch SRI Sukuk facility worth RM550 million (US$125.43 million) in October 2019. The Murabahah-based Islamic medium-term notes (IMTN) have a tenor of three to 22 years.

The wholly-owned indirect subsidiary of Cypark Resources is the appointed turnkey contractor and SPV set up to raise financing for three 30 MWac solar photovoltaic (PV) projects, involving two floating and one ground-mounted solar farms. RAM Ratings assigned the Sukuk an ‘AA3/Stable’ final rating leading up to its issuance.

The Sukuk issuance, first proposed on the 26th July 2019 in an information memorandum, features an innovative turnkey financing model. The three solar PV projects are separately owned by Viva Solar, Cove Suria and Cypark Estuary Solar. The project companies signed 21-year power purchase agreements with Tenaga Nasional for their respective solar PV projects, with a scheduled commercial operations date of the 31st December 2020.

Cypark Ref’s obligations under the Sukuk will be met by the respective turnkey contract payments due from the project companies. The solar turnkey financing structure involves the securitization of vendor financing, where Cypark Ref, as the turnkey contractor, raised financing secured against the aggregation of deferred turnkey payments from three project companies.

The structure enables Cypark Ref to tap the debt capital market for the funding of three separate large-scale solar projects. On their own, each of the three projects would have been considered suboptimal for Sukuk issuances. The three solar projects (90 MW in total) are projected to reduce greenhouse gas emissions by approximately 2.4 million metric tonnes over 21 years, contributing to the UN SDG 13 to take urgent action to combat climate change and its impacts as well as to Malaysia’s pledge to reduce CO2 emission per unit of GDP by 45% in 2030 compared with the level in 2005.

Cypark Ref SRI Sukuk IMTN
RM550 million (US$125.43 million) October 2019
Summary of terms and conditions
IssuerPacific Trustees
ObligorCypark Ref
Size of issueRM550 million (US$125.43 million)
Mode of issuePrivate placement, bought deal, bookbuilding
PurposeTo finance the development of three 30 MWac solar photovoltaic projects
TenorThree to 22 years
Issuance priceRM550 million
CurrencyMalaysian ringgit
Lead manager(s)Maybank Investment Bank
Principal advisor(s)Maybank Investment Bank
Facility agent(s)Maybank Investment Bank
Governing lawMalaysian
Legal advisor(s)/councilWong & Partners
Islamic structureMurabahah via Tawarruq arrangement
Underlying assetShariah compliant commodities
Rating‘AA3’ (RAM Ratings)
Shariah advisor(s)Maybank Islamic

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