IslamicFinance.de

The Federal Land Development Authority is set to raise funds for its 37% stake acquisition in PT Eagle High Plantations Tbk via a mix of loans and sukuk issuance.
Sources familiar with the matter said that 50% of the acquisition figure of RM 2.26 bil would be financed through a loan with a major European banking group. The remaining funds will be raised through a sukuk issuance.
“The sukuk issuance could be announced as early as late January. The debt will be serviced by the cashflow generated by Felda Investment Corp’s (FIC) assets,” said a source. It is probable that the sukuk would come with an explicit government guarantee, given that Felda is a government-backed agency. This is because most institutional funds – which are the likeliest parties to subscribe to the sukuk – can only purchase high-rated bonds as part of their investment mandate. A guarantee would ensure that the bonds are rated at or close to the top investment grade.

During the first eight months of this year, total sukuk issuance in Malaysia reached RM219.4bil compared with RM120.7bil during the same period in 2011. In 2012, the Islamic capital market showed encouraging performance. Moreover, the sukuk area was able to register a record in total issuance value. The Islamic equity segment was bolstered thanks to Felda Global Ventures Holdings Bhd and IHH Healthcare Bhd. The growth tendency of the Islamic capital market is true not only for Malaysia but worldwide as well.

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