(Ahlul Bayt News Agency) - Malaysia plans to sell at least 2 billion ringgit ($636 million) of Islamic bonds to help finance the first phase of construction of a mass railway in Kuala Lumpur, two people familiar with the matter said.
Dana Infra Sdn., a company formed by the country’s finance ministry to fund development projects, may increase the offering to 3 billion ringgit if there’s sufficient demand, said the people, who declined to be named as the information is private. No date has been fixed for the sale because of Europe’s debt crisis and marketing may start as early as June, they said.
Proceeds will go to state-owned Mass Rapid Transit Corp., which is overseeing work on a 156-kilometer (97-mile) railway in the Southeast Asian nation’s capital. The network is targeted at easing congestion in Kuala Lumpur, with the first line scheduled for completion in 2016, the government said in a 2010 report.
The government plans to guarantee a total of 8 billion ringgit of Shariah-compliant bonds for the project, the people said. Dana Infra may issue an additional 30 billion ringgit of the securities via a 50-year program, which will be announced later, one of the people said.
Irwan Siregar, deputy secretary to the treasury, wasn’t immediately available for comment when called today.
The planned offering follows a record 30.6 billion ringgit sale of Islamic bonds, which pay returns from assets to comply with the religion’s ban on interest, by the nation’s toll-road operator PLUS Bhd. completed in January.
Malaysian companies issued 75.6 billion ringgit of sukuk last year, an all-time high, according to data compiled by Bloomberg. Sales total 15 billion ringgit in 2012.