DanaInfra plans to tap Islamic bond market for MRT

The SSP Line will serve a corridor with a population of around two million people stretching from Sungai Buloh to Putrajaya.

He predicts DanaInfra will probably offer 4 percent to 4.15 percent coupons on its 10-year sukuk this week as demand from pension funds and insurers is expected to be healthy.

Winson Phoon, a fixed-income analyst at Maybank Investment Bank Bhd. in Kuala Lumpur, agreed.

“The yield curve has shifted noticeably lower since April,” he said, adding 4.1 percent is where “the 10-year bonds sit on our government-guaranteed curve.”

Issuance of sukuk in Malaysia climbed 65 percent to 52.3 billion ringgit so far this year, with companies building railways, water systems and power plants under Malaysia’s infrastructure plan among the top issuers of Shariah-compliant debt.

RHB Investment Bank Bhd., the second-biggest arranger of ringgit Islamic debt, expects offerings to rise 7 percent to 60.2 billion ringgit in 2016, encouraged by Bank Negara Malaysia’s monetary easing in July, while AmInvestment Bank Bhd., the fourth-largest, forecasts as much as 70 billion ringgit. The two firms gave their forecasts last month.

While futures trading implied a 17 percent chance of the Fed raising its benchmark interest rate in November, there is a 64 percent probability of an increase in December. Even then, that will be the first hike this year, after the median forecast from Fed policy makers at the end of 2015 had been for four rate rises in 2016.

“The new rate environment encourages issuers,” Toh said in a phone interview Monday. “While DanaInfra has its own funding requirements, the expectation that the Fed will refrain from raising borrowing cost also plays into the environment.”