Malaysian infrastructure developers continue to prefer Shariah compliant financing - IFN

Malaysian infrastructure developers continue to prefer Shariah compliant financing

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MALAYSIA: Malaysia-based property construction conglomerate Sunway has procured a financing of approximately US$150 million from two foreign financial institutions. The Commodity Murabahah Financing-I facilities were granted by Standard Chartered Saadiq and HSBC Amanah. According to a filing to the Malaysian bourse Bursa Malaysia yesterday, the company obtained US$75 million from each bank. The financing attained will be used to facilitate the partial repayment of the group’s existing debt. Late last month, the company managed to secure a US$67 million term financing facility from Oversea-Chinese Banking Corporation’s (OCBC). The facility acquired from OCBC’s Labuan branch was said to be used for the refinancing of the group’s prevailing Islamic term financing facility granted to its subsidiary, Sunway MUSC, by Maybank Islamic. Part of the US$67 million was also advanced to the construction of a new building in Monash University Malaysia campus by Sunway MUSC. Numerous Sukuk issuances have been made from the various industries in Malaysia including telecommunications, transport, water and power. Infrastructure development companies such as Sime Darby, United Malayan Land, Plus Highway, Syarikat Prasarana Negara and Lekas, like Sunway have also opted for Shariah compliant means of raising funds. This was done through Sukuk issuances as well as the many avenues of Islamic financing. Plus Highway last year issued RM30.6 billion (US$10 billion) in Sukuk, marking the largest Sukuk issuance in 2012. Sime Darby also issued a US$800 million Sukuk in May which was lauded and oversubscribed by 10 times. This bears a clear indication of the prevailing preference of Islamic financing in the Malaysian infrastructural development landscape.