Malaysia raises RM4.5b in inaugural Sustainability MGII

Oversubscription of 2.38 times reflect investors’ confidence in the nation, reinforcing its position as the world’s largest sukuk market

by S BIRRUNTHA / pic BLOOMBERG

THE Malaysian government has successfully tapped into the domestic market for its inaugural issuance of Sustainability Malaysian Government Investment Issues (Sustainability MGII) of RM4.5 billion despite the uncertain global economic outlook, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said.

In a statement, the minister said the strong demand was evidenced by the Sustainability MGII’s oversubscription of 2.38 times and was successfully priced at a profit rate of 4.66%.

He added that the total incoming bid of RM10.7 billion was the largest since July 2019 for a long duration (equal or more than 15 years) Malaysian Government Securities (MGS)/MGII auction.

“The keen interest demonstrates investors’ vote of confidence in Malaysia’s strong economic fundamentals and growth outlook for 2022,” he noted.

According to Tengku Zafrul, as the first domestic sustainability MGII issuance, this issue- ance serves as a new benchmark as it showcases Malaysia’s global leadership in Islamic finance, reinforcing its position as the world’s largest sukuk market.

He said the issuance attracted a diverse group of investors, with the allocation distributed among local financial institutions

(50.3%), institutional investors (38.4%), insurance companies (7.2%) and foreign investors (4.1%).

He highlighted that the new Sustainability MGII is expected to further entice demand from real-money investors, particularly those who are looking to formulate a sustainability portfolio.

Tengku Zafrul said the issuance proceeds would be utilised to finance or refinance eligible social and green projects, as defined in the government’s Sustainable Development Goal (SDG) sukuk framework, similar to the US dollar sustainability sukuk issued in 2021.

The minister added that the issuance will enable Malaysia to not only meet its commitments as a responsible nation and signatory to the Paris Agreement, but also further its efforts to advance its people’s socio-economic wellbeing.

He also said the issuance is a testament to the government’s efforts in advancing climate action, as well as accelerating the transition towards achieving a prosperous, inclusive and sustainable nation, in line with the 12th Malaysia Plan 2021-2025.

“The government would like to thank all investors who have clearly shown their confidence in the MGII Lestari Sukuk issue, which has been oversubscribed.

“The investors’ confidence and recognition are not only in Malaysia’s economic fundamentals and strong growth prospects, but also in the countr y’s economic resilience.

“This issuance also showcases the Malaysian Islamic finance industry’s innovative capability and global leadership in sukuk structuring, and in advancing SDG-focused policies to enable everyone in the Malaysian Family to prosper together,” he noted.