Malaysian energy infrastructure and technology company Yinson Holdings issued a landmark Sukuk Wakalah facility worth RM1 billion (US$236.83 million) under its Islamic medium-term note program. NESSREEN TAMANO writes about the Islamic paper, which is touted as the country’s first sustainability-linked Sukuk.
Leveraged on Yinson’s Sustainability-Linked Financing Framework and Climate Goals Roadmap, the Sukuk facility supports the company’s efforts to achieve its climate transition strategy and reinforce its commitment toward a low emission future by achieving carbon neutrality by 2030 and net zero by 2050.
Yinson’s sustainability-linked Sukuk facility focuses on incorporating measurable, forward-looking sustainable performance targets into its structure, unlike traditional sustainable and responsible investment (SRI) and green Sukuk that are earmarked for specific environmental, social and governance purposes.
These targets include, among others, the increase of Yinson’s renewable energy generation and the decrease in the company’s carbon intensity per barrel of oil equivalent.
“We are proud to be making history by establishing and successfully completing Malaysia’s very first sustainability-linked Sukuk program,” said Daniel Bong, Yinson’s group chief strategy officer.
“Offering a Sukuk that relies on our sustainability performance is both a challenge and a golden opportunity for Yinson to demonstrate the serious action that we are taking to achieve our climate-related targets,” Bong added.
The final offer size had been upsized from its original target of RM700 million (US$166.05 million) after it received overwhelming demand, resulting in an orderbook of RM1.66 billion (US$392.79 million) or an oversubscription of 1.66 times.
“The high-quality investor demand and oversubscription of the Sukuk highlight the strong interest of the investment community in a rapidly changing business environment. Importantly, this is also a reflection of our commitment to supporting the Malaysian government in the development of the sustainable finance landscape while achieving the country’s sustainability ambitions,” Raja Amir Shah, CEO of HSBC Amanah, noted.
Malaysia, an Islamic finance industry leader, has also been a pioneer in aligning the sector with the sustainable agenda, having launched its Sustainable and Responsible Investment Sukuk Framework in 2014. It issued the world’s first sovereign sustainability Sukuk worth US$1.3 billion in April 2021, encouraging the rapid growth of the SRI domestic Sukuk market.
Yinson was founded in 1983 as a transport and logistics company in the state of Johor Bahru, Malaysia. It later, in 2019, diversified into renewables and established its green technologies division in 2020.
|Yinson Holdings’s Sukuk |
RM1 billion (US$236.83 million)
7th November 2021
|Structure||Sustainability-linked Sukuk Wakalah|
|Profit rate||5.55% p.a.|
|Maturity date||7th December 2026|
|Sole principal advisor, lead arranger and lead manager||HSBC Amanah|
|Legal advisor||(For HSBC Amanah) Zul Rafique & Partners|
|Rating||‘A1’ by RAM Ratings; ‘A+’ by Malaysian Rating Corporation|
|Use of proceeds||To fund the company’s upcoming infrastructure projects|