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Thursday, May 30, 2024

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UDA Holding targets first sustainability Sukuk issuance for April 2023

Urban infrastructure development company UDA Holding (UDA) is looking to issue the first tranche of its newly established RM1 billion (US$221.14 million) Sukuk Wakalah facility by the end of next month, Lo Teck Mun, the senior manager for debt capital markets at RHB Investment Bank, the sole principal advisor of the program, told ISFI.

The Sukuk program will provide revolving capital for the financing of commercial, housing, industrial and Waqf development projects.

“UDA is targeting to make their first issuance of the Sukuk Wakalah program hopefully by end of April 2023,” Lo commented, further noting that the size of the inaugural issuance has yet to be determined.

On the 10th February 2023, MARC Ratings assigned a ‘Gold’ impact assessment to the government-established company’s Sustainability Sukuk Framework, which was established to set the guiding principles for its issuance of sustainability Sukuk. It also outlines UDA’s in-house sustainability management and ratings tool, UDA SMART.

The Sukuk framework proposes a non-exhaustive list of 14 Waqf, affordable housing and green building projects to be financed and refinanced through the issuance of sustainability Sukuk, including four Waqf projects targeting to start this year.

The Waqf projects for this year include the ‘Amaanee’ condominium project and the ‘Wakaf Seetee Aishah 2’ shop office project in Pinang, Malaysia.

UDA’s Sukuk program received a preliminary rating of ‘MARC-1IS/AA-IS’ with a stable outlook from MARC Ratings on the 22nd December 2022. The rating was based on its track record in property development.

The rating also benefited from a one-notch uplift based on the company’s status as a wholly-owned entity of the Minister of Finance (Incorporated) in addition to its role in property development in line with the Malaysian government’s socio-economic objectives. 

‘Wholly owned by the Minister of Finance [Incorporated] since 2009, UDA’s activities have expanded to include the development of green building projects, affordable housing and joint ventures in developing Waqf land,” the rating agency commented.

While the Sustainability Sukuk Framework aligns with SDG 7 to ensure access to affordable, reliable, sustainable and modern energy for all, it is notable that its use of proceeds exclusion criteria includes large-scale hydropower plants, which are defined as hydropower plants with a capacity of over 30 megawatts.

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