PETALING JAYA (July 3, 2013): Tenaga Nasional Bhd (TNB) is planning to sell as much as RM2 billion of Islamic bonds to refinance existing debt, Bloomberg reported yesterday.
Citing unnamed sources, it said that TNB may offer notes with maturities of one to 13 years at indicative yields of 3.82% to 4.95%.
According to the news agency, TNB was coming to market when borrowing costs are rising after Federal Reserve chairman Ben S. Bernanke said monetary stimulus that's driven demand for debt in developing nations could be withdrawn.
The yield on the government's 10-year local-currency non-Islamic notes has climbed 49 basis points to 3.62% since the US central bank governor first indicated a possible end to its bond-buying program on May 22, it said.
"Demand for the Tenaga sukuk may be decent based on the indicative profit rates, notwithstanding current volatility," Michael Chang, who oversees US$1 billion as head of bonds at MCIS Zurich Insurance Bhd in Kuala Lumpur, told Bloomberg in an interview yesterday.
"The final yield pricing has to be attractive as the secondary market is offering compelling yields," he said.
TNB's securities are rated AA+, the second-highest investment grade at Malaysian Rating Corp and will the debt will be sold via Kapar Energy Ventures Sdn Bhd, which is 60% controlled by TNB and operates the largest thermal power station in the country.
The Islamic note offering is the second this year from TNB. The company sold RM1.62 billion sukuk in May with maturities of four to 23 years to part finance the construction of a new power plant. The utility sold a 2026 portion at a coupon rate of 4.21%.
Malaysia is the world's biggest issuer of sukuk, which pay returns on assets to comply with Islam's ban on interest.