Sukuk dominates in independent power producer bond issues in Malaysia

Based on RAM’s data and information gleaned from Bank Negara Malaysia's FAST (Fully Automated System for Issuing/Tendering) system, sukuk has become more prominent as part of power funding over the years, with more than 93% of independent power producer (IPP) bond issues comprising sukuk after 2000, compared to only 25% before that. 

“Power bonds have accounted for 39% of Malaysia’s RM239 billion of infrastructure bond issues in the last decade,” said Chong Van Nee, Co-Head of Infrastructure and Utilities Ratings, RAM Ratings. “Nearly all of Malaysia’s outstanding IPP bonds - amounting to RM28 billion - are sukuk issues.”

RAM Ratings notes that the Malaysian power industry has been one of most active sectors tapping the local bond market for its funding needs, with tenures ranging from 10 to 30 years. The observation is published in the maiden report in its ASEAN Power Series, Energising a steady growth path. 

The report presents RAM’s assessment of the power sector’s structure, regulatory landscape, capacity and fuel-supply situation, the key players and how these influence the industry’s growth and infrastructure funding.

Interested?

Non-subscribers may purchase the report at RM530 (inclusive of GST) per copy. For further enquiries, please contact Ms Ain at +603 7628 1108 or Mr Faiez at +603 7628 1104.