KUALA LUMPUR: Malaysia’s first financial guarantee institution, Danajamin Nasional Bhd, is evaluating 11 applications worth RM3.5bil from companies to enable them to raise bonds and finance projects.
Chief executive officer Ahmad Zulqarnain Onn said these companies, which were trying to tap the sukuk and bond markets for capital raising, came from various industries such as education, transport and healthcare.
“Based on the number of applications that we have, we are on track to issue RM3bil guarantees by the end of this year,” he said at a media roundtable here yesterday.
Zulqarnain said Danajamin always took due care on every application to ensure that risks were mitigated and consistently applied tight criteria of underwriting principle before providing the facility.
“This guarantee is available to any company as long as the project is viable, involves good risk management practice and the terms can be agreed upon. Then we will issue the guarantee,” he said, adding that to date, it had approved a total of RM2.9bil guarantees for companies.
Of the approved guarantee of RM2.9bil, about 75% of the value is sukuk and 25% is conventional, according to Zulqarnain.
He said that since it was established in May 2009, Danajamin had rejected only one application as the company concerned could not agree on the terms and meet the underwriting principles.
“As the financier, we always look at the viability, clear purpose of funds utilisation, adequate control of fund disbursements as well as ringfencing of cashflow for repayment, sufficient security arrangements and appropriate covenants based on projections,” Zulqarnain said.
He said most companies that sought financial guarantee normally could be funded by the banks but Danajamin gave the ability to raise long-term fixed-rate funding. — Bernama
“If you go to the bank, typically you can probably get fixed rate loan up to five years, beyond that is difficult. So, if you want long term fixed rate funding, the natural alternative is to go to the bond market,” he said. “We don’t compete with the banking system, in fact we complement them in terms of filling the gap for long term fixed gap funding. We encourage banks and would be delighted to co-guarantee any issue as well.”
Ahmad Zulqarnain said Danajamin aimed to set new benchmarks on how bond and sukuk structured in the country by following all basic credit principles to reduce default and unsavoury activities. — Bernama
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