KUALA LUMPUR: Petronas Gas Bhd is planning Malaysia's biggest sukuk offering this year, at a time when top-rated corporate bond yields are at a nine-month high.
The unit Petroliam Nasional Bhd (Petronas) invited pitches from banks to arrange as much as RM5bil of Islamic debt, three people with knowledge of the matter said on March 28, asking not to be named as the details are private.
The yield on Malaysia's three-year AAA-rated notes climbed three basis points in 2013 to 3.56%, the highest since June 29, a central bank index shows.
Petronas Gas plans to use the funds from the sukuk for two regasification plants, part of a US$444bil (RM1.37 trillion) spending programme started by Prime Minister Datur Seri Najib Razak that aims to propel Malaysia to developed-nation status by 2020.
The company sold its first syariah-compliant notes in August via unit Kimanis Power Sdn Bhd. The 5.05% securities due 2023 last yielded 4.23%, data compiled by Bloomberg show.
“The company is planning the sukuk because it's confident that the present government will win the elections,” said Mohamed Azahari Kamil, chief executive officer at Asian Finance Bank Bhd. the Malaysian unit of Qatar Islamic Bank SAQ.
“With the Petronas name, the company won't have any problem selling the debt,” he said in an interview.
The two regasification plants will be built in Johor and Sabah, according to Petronas Gas' latest annual report.
The company said in an e-mailed statement yesterday that it was unable to comment on whether it would sell sukuk. A separate facility that the company started building in 2010 will begin commercial operations this quarter, a Nov 23 stock exchange filing shows.
Petronas Gas is 60.7% owned by Petronas and has RM860mil of sukuk outstanding, according to data compiled by Bloomberg.
It will report net income of RM1.54bil for the year ending Dec 31, 2013, compared with RM1.4bil last year, according to the mean estimate of 13 analysts surveyed by Bloomberg News.
“Petronas Gas is a strong corporate issuer and could be rated AAA if it has the support of its parent,” Elsie Tham, senior manager at Manulife Asset Management Sdn, who oversees more than US$1bil (RM3.1bil), said in an interview yesterday.
“It's a name I will be interested in, regardless of elections. My decision to buy, however, will depend on the yields being offered.”
The yield on Malaysia's 3.928% government sukuk due 2015 fell one basis point to 1.34% yesterday and has risen six basis points this year, according to data compiled by Bloomberg.
The premium investors demand to hold Dubai's 6.396% securities due November 2014 over Malaysia's debt was steady at 106 and has widened 26 basis points in 2013.
Islamic bonds sold to international investors returned 0.5% in 2013, according to the HSBC/Nasdaq Dubai US Dollar Sukuk index, while developing-market debt declined 2.3%, JPMorgan Chase & Co's EMBI Global Composite Index shows.
The average yield on global sukuk climbed six basis points, or 0.06 percentage point, to 2.92% in March, the biggest monthly advance since May 2012, according to the HSBC/Nasdaq index.
The difference between the average yield and the London interbank offered rate, or Libor, widened four basis points over the period to 177 basis points, the gauge shows.
The Bloomberg-AIBIM Bursa Malaysia Corporate Index, a benchmark that tracks 57 local currency issues, gained 0.7% this year to 103.019 on March 29, while a similar gauge for sovereign notes rose 0.6% to 110.318.
Syarikat Prasarana Negara Bhd. plans to sell RM6bil of sukuk in two portions this year to build a light rail system in Kuala Lumpur, Azhar Ghazali, its media affairs manager said in a Jan 4 e-mail.
Tenaga Nasional Bhd will raise funds via sukuk and equity to build a RM2.47bil power plant, the company said in a stock exchange filing in November. - Bloomberg
Petronas Gas should be able to attract interest in its sukuk because it's a rare issuer and the result of the national elections won't affect the company's risk profile, according to MCIS Zurich Insurance Bhd.
“I'm comfortable with the Petronas' name,” said Michael Chang, who oversees US$1bil as head of bonds at MCIS Zurich Insurance in Kuala Lumpur, in an interview yesterday.
(The Star Online / 03 April 2013)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com