Port of Tanjung Pelepas eyes govt-guaranteed sukuk

The Port of Tanjung Pelepas plans to issue RM1 billion to RM2 billion of governmentguaranteed Islamic bonds to fund its expansion, a source familiar with the deal said yesterday. The paper will have maturities of up to 10 years, said the source, who asked not to be identified as the deal has not been publicly announced, reports Reuters (Oct 8, 2009).
It said another source said the paper would be issued by the end of the year, adding that Port of Tanjung Pelepas was not immediately available for comment.
THE STORY GOES ON:
The Port of Tanjung Pelepas Islamic bonds, or sukuk, come after an earlier RM5 billion governmentguaranteed bond issue by the Terengganu Investment Authority, the investment arm of a Malaysian state. Bankers say the Malaysian government will be raising more funds through statelinked firms as it ratchets up spending to woo foreign investment as well as to pull its trade-dependent economy out of a recession. Malaysia's economy was officially forecast to shrink 4% to 5% this year but the central bank has said this estimate would be revised, after gross domestic product fell by a smaller-than-expected 3.9% in the second quarter from a year ago. Port of Tanjung Pelepas is 70%-owned by Malaysian infrastructure group MMC Corp and is located at the southern end of the Malacca Straits, Asia's busiest shipping route. Islamic bonds are usually structured as profit-sharing or lease-based agreements to avoid paying interest, which is prohibited by the Islamic religion. Sukuk issuance plummeted 56% to US$14.9 billion (RM50.56 billion) in 2008, according to Standard & Poor's, but there are early signs that a global economic recovery is bringing some issuers back to the market.