The best Islamic project finance deal 2023
Amanat Lebuhraya Rakyat Berhad's RM5.5 billion ($1.22 billion) sustainability sukuk murabahah programme.
Highway concession company Amanat Lebuhraya Rakyat (ALR) achieved three milestones in October 2022: the largest ringgit-denominated corporate sustainability sukuk; Malaysia’s first sustainability highway sector sukuk; and the biggest ringgit corporate sukuk in 2022.
The deal was led by sole financial adviser AmInvestment Bank and principal lead manager and bookrunner CIMB Investment Bank.
ALR is a private consortium of highway concession companies established in 2021. The five stakeholders are Gamuda, Lingkaran Trans Kota Holdings, MMC Corporation, Kumpulan Perangsang Selangor and Perbadanan Kemajuan Negeri Selangor.
The four acquisitions ALR was established to facilitate are: Lingkaran Trans Kota, Sistem Penyuraian Trafik KL Barat, KESAS and Syarikat Mengurus Air Banjir dan Terowong.
The proceeds from the ALR RM5.5 billion ($1.22 billion) sustainability sukuk murabaha will fund those acquisitions and refinance all the existing concession companies’ financing facilities.
The transaction involved the simultaneous issuance of new sukuk by ALR and the early redemption of each of the concession companies’ existing sukuk and financing responsibilities. All of these were executed without a bridge financing facility.
ALR’s deal was the largest project finance sukuk in 2022 and one that paves the way for other issuers to come to the market
The deal achieved a triple-A grade from RAM Rating Services. On the environmental, social and governance side, the sukuk earned an AAAIS rating from MARC Ratings. It earned a tier 1-3 grade for social and environmental benefits from RAM and a silver sustainability sukuk assessment from MARC.
ALR’s deal was the largest project finance sukuk in 2022 and one that paves the way for other issuers to come to the market. The sukuk priced around the same time the US Federal Reserve raised interest rates by 75 basis points.
A good reception from investors allowed final price guidance for certain tranches to be tightened by 10bp. At close, the orderbook size was RM5.6 billion against a proposed offering of RM4.25 billion in aggregate nominal value.