The Government of Malaysia has issued its first sustainability sukuk. The underlying assets of the sukuk are certificates reflecting travel privilege on the public rail system. The ten-year USD800 million sukuk was valued at 2.07 per cent. The government has also issued USD500 million in 3.075 per cent 30-year trust certificates.
Asian investors received 46 per cent of the ten-year sukuk, Europe, the Middle East, and Africa received 33 per cent of the principal amount and the remaining 12 per cent of the share went to the United States. The revenues from the sale will be used to fund or refinance new or current construction projects with a social and/or environmental objective that are consistent with the United Nations’ Sustainable Development Goals (SDGs). The will include projects related to clean transportation (SDG 11), sustainable management of natural resources (SDG 15), renewable energy (SDG 7) and green buildings (SDGs 9 and 11).
The bond offering was oversubscribed by more than six times, prompting the government to increase the overall target size from USD1 billion to USD1.3 billion. The Shariah framework of the Sustainability Sukuk was approved by the CIMB Islamic Bank Berhad Board Shariah Committee and the HSBC Global Shariah Supervisory Committee.
Sustainalytics, an ESG analysis and ratings firm, reviewed the government’s sustainability policy and considered it to be in line with the four key areas of the Social Bond Principles 2020 (SBP), the Green Bond Principles 2018 (GBP), and the ASEAN Sustainability Bond Standards 2018. (ASEAN SUS).