Launch Partners

Friday, September 30, 2022

Launch Partners

Khazanah Nasional’s sustainable energy subsidiary, Cenergi SEA, issues green Sukuk

Khazanah Nasional (Khazanah)’s sole sustainable energy subsidiary, Cenergi SEA (Cenergi), issued its inaugural RM210 million (US$47.41 million) Sukuk on the 23rd December 2021. The proceeds from the ASEAN SRI green senior Sukuk Wakalah issuance will finance and refinance eligible biogas, solar, other renewable energy, energy efficiency and sustainable biomass fuel projects. CIMB Investment Bank acted as the sole principal advisor for the issuance.

Issued under Cenergi’s Islamic notes issuance program of up to an aggregate amount of RM1.5 billion (US$338.66 million), the Sukuk comprised two tranches featuring an RM85 million (US$19.19 million) tranche with a maturity of five years and a profit rate of 5.3% per annum (p.a) and a RM125 million (US$28.22 million) tranche with a maturity of seven years with a profit rate of 5.55% p.a. The Sukuk program received a final rating of ‘A1/stable’ and ‘A3/stable’ for the senior Sukuk and subordinated perpetual Sukuk respectively.

The Sukuk targets to contribute to SDG 7 of affordable and clean energy, SDG12 of responsible consumption and production and SDG 13 of climate action. The proceeds from the green Sukuk Wakalah are intended to be used to finance projects and activities that contribute to emission reductions and have a direct positive environmental impact, according to Cenergi’s Green Sukuk Framework.

Cenergi has positioned itself favorably with its biogas plants backed by long-term renewable energy power purchase agreements (REPPAs) with Tenaga Nasional for the sale of electricity. The REPPA terms feature no cash penalties for completion delay or underperformance.

“Cenergi is deemed to benefit from a moderate likelihood of extraordinary support from Khazanah in the event of financial distress. This is underlined by the group’s important role as Khazanah’s only sustainable energy arm as well as its strong relationship with the latter. Khazanah has provided explicit financial backing and is actively involved in Cenergi’s key investment decisions through board representation,” RAM Ratings said.

The Sukuk facility aligns with the Securities Commission Malaysia’s Sustainable and Responsible Framework, the ASEAN Green Bond Standards and the Green Bond Principles. Additionally, Cenergi will likely benefit from the Twelfth Malaysia Plan which indicates an increased deployment of biogas energy and introduces new policies and frameworks to intensify renewable energy adoption and energy efficiency investments.

Cenergi SEA inaugural SRI Sukuk
RM210 million (US$47.41 million)

23rd December 2021
Summary of terms and conditions
Issuer
cenergi sea
Size of issue
RM210 million (US$47.41 million)
Tranche 1: RM85 million (US$19.19 million)
Tranche 2: RM125 million (US$28.22 million)
Purpose
To finance and refinance eligible biogas, solar, other renewable energy, energy efficiency and sustainable biomass fuel projects.
Tenor
Tranche 1: Five years
Trance 2: Seven years
Profit rate
Tranche 1: 5.3% p.a
Trance 2: 5.55% p.a
Payment
annual
Currency
Malaysian ringgit
Maturity date
23rd December 2028
Lead manager(s)
CIMB Investment Bank
Principal advisor(s)
CIMB Investment Bank
Bookrunner(s)
CIMB Investment Bank
Governing law
Malaysian law
Legal advisor(s)/council
Adnan Sundra & Low
Islamic structure
Wakalah Bi Al-Istithmar
Murabahah (via Tawarruq arrangement)
Listing
No
Underlying asset
Shariah compliant commodities
Rating
‘A1/stable’ and ‘A3/stable’
Shariah advisor(s)
CIMB Islamic Bank
Tradability
Yes

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here