Petronas considers RM5 billion Islamic bond programme

Malaysia’s Petronas Gas Bhd (Petronas Gas) is considering setting up a RM5 billion (US$1.6 billion) Islamic bond programme to part finance the construction of regasification plants, three people familiar with the deal said.

The gas distribution arm of state oil company Petroliam Nasional Bhd (Petronas) invited proposals from investment banks to arrange the debt sale, said the people, who asked not to be named as the details were private.

A sale would be the Kuala Lumpur-based company’s second offering of sukuk, or debt that paid returns on assets to comply with Islam’s ban on interest.

It sold RM860 million of syariah-compliant notes in August via unit Kimanis Power Sdn Bhd to part finance a power plant, with maturities ranging from 2016 to 2028.

The 5.05 per cent notes due in 2023 yielded 4.23 per cent on Wednesday, according to data compiled by Bloomberg.

Petronas Gas started building its first regasification plant in Malacca state in 2010 to meet rising domestic demand. The terminal was expected to begin commercial operations in the second quarter of this year, the company said in November.

The group was also planning similar facilities in southern Johor and Sabah, according to its latest annual report.

Samsudin Miskon, Petronas Gas chief executive officer, could not be immediately reached for comments.

Global Islamic bond sales had dropped 18 per cent this year to US$10.3 billion, after reaching a record US$46.5 billion last year, according to data compiled by Bloomberg.

Average sukuk yields had climbed 10 basis points, or 0.1 percentage point, to 2.91 per cent this year, 24 basis points off an all-time low reached in January, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index. — Bloomberg

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