Issuer: MYEG Services Berhad
Size: RM250 million
Structure: Wakalah bi istithmar
Tenor: Three years
Banks: CIMB Islamic Bank and HSBC Amanah (lead arrangers and sustainability structuring advisers)
Date: August 2023
While there were plenty of innovative Islamic financings in Asia last year, there was only one that touched on two of the most important themes and potentially transformative developments in recent years: sustainability and blockchain technology.
Malaysian digital services company MYEG’s RM250 million ($52 million) three-year, 5.4% sukuk in August was not only a sustainable sukuk – supporting the building of accommodation for foreign workers – it was also the first time in the country’s sukuk market that blockchain has been given as use of proceeds.
As such, MYEG, a Malaysian government concessionaire, intends to use the funds raised to help fund the development of the country’s national blockchain infrastructure, as well as to build housing for workers.
Malaysia’s government has been investing substantially in its digital infrastructure over the past few years, including in broadband and 5G connectivity, data centres, cloud computing, artificial intelligence and blockchain.
It was the first time in the country’s sukuk market that blockchain has been given as use of proceeds
The government has a national blockchain roadmap, and the technology is already being used to develop a national digital identity scheme for government platforms, transactions and initiatives.
Specifically, proceeds from the sukuk will be used to pay for the development and deployment of Zetrix, an interoperable, decentralized, public blockchain network supporting real-world use cases such as cross-border trade and supply-chain finance.
Issuing a sukuk to help fund a high-tech and strategically important development for Malaysia was always likely to draw strong demand from local investors. Such was the demand, MYEG and its banks managed to upsize the deal by RM50 million from an initially targeted RM100 million to RM200 million range.
Financial institutions bought most of the sukuk (56%), followed by asset managers (34%) and quasi-government institutions (10%). Importantly, this the first time MYEG has issued a sukuk on the public markets to institutional investors.
Whether or not other issuers in Malaysia and elsewhere will now sell sukuk to help pay for investment in blockchain infrastructure is unclear, but MYEG has provided the test case.
