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MY EG Services’s Sukuk: Supporting business expansion

Malaysian digital services company and e-government services provider MY EG Services (MYEG) has launched a Sukuk issuance worth RM100 million (US$21.84 million), over a month after it established a Sukuk Wakalah program. NESSREEN TAMANO reports.

The Islamic facility carries a fixed coupon rate of 5.85% and a five-year tenor. CIMB Investment Bank was mandated as the lead arranger for the transaction.

The Sukuk facility was issued under MYEG’s Islamic medium-term note (IMTN) program worth up to RM1 billion (US$218.37 million) that the company lodged with the Securities Commission Malaysia in October 2022. Proceeds from the program was earmarked for MYEG’s Shariah compliant working capital requirements, capital expenditure, investments and the financing of its business expansion.

The IMTN program had received a final rating of ‘AA-IS’ with a stable outlook from MARC Ratings almost two weeks before the Sukuk issuance, mirroring its assigned preliminary rating announced in October.

MYEG has been a concessionaire for the Malaysian government since 2000, running an electronic platform that provides government-to-citizens services, primarily focused on the renewal of driver’s licenses and the renewal of foreign worker permits. The company also implemented health-related digital services for the Ministry of Health in 2020 connected to the COVID-19 pandemic.

Most recently, MYEG embarked on two new projects: the Zetrix blockchain platform, a government-headed initiative aimed at increasing efficiency for supply chain management, and the construction of hostels for foreign workers in several states across the country. The initial drawdown of up to RM500 million (US$109.19 million) under the IMTN program is projected to be utilized for the blockchain and foreign worker accommodation projects, MARC Ratings had said in a note.

“The assigned rating reflects MYEG’s established position as a long-standing concessionaire for e-government services, underpinned by its strong IT infrastructure. The rating also considers the steady growth of its non-concession-related businesses (commercial businesses), its high operating margin and healthy cash flow generation. Moderating the rating are market and operational risks associated with its two new key businesses, namely its blockchain platform and foreign worker accommodation projects,” stated the agency.

MY EG Services’s Sukuk RM100 million (US$21.84 million) 21st November 2022
IssuerMY EG Services
TenorFive years
Maturity date19th November 2027
Coupon rate5.85%
Periodic distribution rate5.69% per annum
First coupon payment date22nd May 2023
Coupon frequencySemi-annually
TypeIslamic medium-term notes
StructureBi Istithmar; Murabahah; Wakalah
Joint principal advisors and lead arrangersCIMB Investment Bank; HSBC Amanah Malaysia
Joint lead managers and bookrunnersCIMB Investment Bank; HSBC Amanah Malaysia; Maybank Investment Bank; AmInvestment Bank

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