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Tuesday, October 4, 2022

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Pengurusan Air Selangor’s Sukuk: A debut SRI issuance

Malaysia’s largest water services provider Pengurusan Air Selangor has issued its debut SRI [socially responsible investing] Sukuk, raising RM1 billion (US$240.27 million) through two tranches, to support its mission to ensure the sustainable supply, use and management of treated water in the country. NESSREEN TAMANO writes.

The Sukuk facility, issued under the company’s existing RM10 billion (US$2.4 billion) Sukuk Murabahah program, consists of Air Selangor’s first-ever SRI Sukuk worth RM430 million (US$103.32 million) and a second tranche of RM570 million (US$136.95 million) Islamic medium-term notes across four series, with tenors ranging from seven to 20 years.

Proceeds from the first tranche will be used to finance projects that meet the requirements of Air Selangor’s Sustainable Development Sukuk Kelestarian Framework, which includes sustainable water supply and management projects, renewable energy and green buildings.

The second tranche has meanwhile been earmarked to finance the company’s capital expenditure and working capital requirements.

“We are committed to leading the way in sustainable water management through initiatives and investments that contribute towards reducing environmental impact, while delivering meaningful value across the economic, environmental and societal sectors,” said Suhaimi Kamaralzaman, CEO Of Air Selangor.

Air Selangor last year developed a sustainability strategy for 2020–22 which aligns its 30-year capital investment program with the UN Sustainable Development Goals. The Sukuk Kelestarian Framework was established under the strategy along with a 30-year Sukuk program with the intent to issue SRI Sukuk.

The recent SRI Sukuk issuance is also not the company’s first foray into the Islamic capital market; Air Selangor last issued a Sukuk facility under the same Sukuk Murabahah program in December 2020, a dual-tranche paper worth a total of RM1.15 billion (US$276.31 million) that was 135% oversubscribed.

Pengurusan Air Selangor’s Sukuk
RM1 billion (US$240.27 million)
1st November 2021 
  
IssuerPengurusan Air Selangor
Issue sizeTranche 1: RM430 million (US$103.32 million)
Tranche 2: RM570 million (US$136.95 million)
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StructureTranche 1: SRI Sukuk Murabahah
Tranche 2: Islamic medium-term notes
Joint lead arrangersBank Islam Malaysia; CIMB Investment Bank; OCBC Al-Amin Bank
Use of proceedsTranche 1: To finance projects that meet the requirements of Air Selangor’s Sustainable Development Sukuk Kelestarian Framework
Tranche 2: To finance the company’s capital expenditure and working capital requirements
Rating (for the Sukuk program)(For Sukuk program)
‘AAA’ long-term rating and ‘P1’ short-term rating by RAM Ratings

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