Tenaga's RM10b sukuk taps market interest - PM Najib

Tenaga's RM10b sukuk taps market interest - PM Najib
-A +A

KUALA LUMPUR (Nov 3): Prime Minister Datuk Seri Najib Tun Razak said Tenaga Nasional Bhd expects "adequate demand" for the planned RM10 billion Islamic bond issued by 70%-owned subsidiary, Jimah East Power Sdn Bhd.

Najib, who is also finance minister, said in Parliament today that state-owned utility Tenaga anticipated enough demand for the sukuk, as ringgit-denominated bond sales has reduced.

"With the reduced new issuance in local ringgit market and adequate liquidity, TNB (Tenaga) expected that there will be adequate demand for its proposed sukuk issued by JEP (Jimah East).

"The sukuk is supported by Tenaga, as the main sponsor of 70% of the (power) project," Najib said in a written reply to Jelutong MP Jeff Ooi.

Ooi had earlier asked Najib to state in what way can Tenaga handle the risk related to the sukuk, amid weaker bond sales.

Today, Najib said that new bond sales as at third quarter of 2015 had reduced to RM41 billion, from RM62 billion in 2014. In the past, annual bond sales through the Malaysian private debt securities market amounted to an average of RM70 billion to RM80 billion, according to him.

Despite weaker bond markets, Najib said Tenaga was confident investors would receive Jimah East's sukuk, due to its high credit quality.

"These views were voiced by potential investors through discussions and feedbacks. They also expressed interest to take part in this sukuk issuance at a reasonable price.

"Tenaga hopes [for] good support from all financial institutions and government agencies such as the Employees Provident Fund, Retirement Fund Inc (KWAP), Permodalan Nasional Bhd, Lembaga Tabung Haji, Perkeso, life insurance (firms) and fund managers, to ensure the success of the proposed sukuk," Najib said.

Tenaga had in July this year, acquired the 70% stake in Jimah East from state-owned 1Malaysia Development Bhd (1MDB). Najib is chairman of 1MDB's advisors board.

At 12:30pm, Tenaga shares fell two sen or 0.2% to settle at RM12.64, for a market value of RM71.34 billion. Some six million shares exchanged hands.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)