KUALA LUMPUR: Malaysia’s bond market is still in the early stages of participation in digital infrastructure and data centre financing but is becoming increasingly ready to support the sector, said MARC Ratings Bhd head of portfolio for structured finance, property and retail Yazmin Abd Aziz.
She said that while many data centre financing deals have already been concluded in Malaysia, most have so far been done on a private or bilateral basis.
However, Yazmin added that growing discussions within the market show rising interest in developing public market issuances for the sector.
"There have been a lot of deals done already in Malaysia. However, I would say most or all of them for now are on a private basis. It is still in the early stages. We have not yet had any direct issuance, public issuance that is directly linked to a data centre. But a lot of conversation is going on," Yazmin said during a panel session on MARC Malaysian Bond and Sukuk Conference 2025 (MMBS 2025) held virtually today.
She noted that market participants were now laying the groundwork for public market participation, with both issuers and investors learning together as the industry evolves.
"Everyone is setting the building blocks to have penetration in the public markets for data centre issuances and everybody is curious on the same learning curve, where we are moving together. We are seeing how best to get capital markets to facilitate these data centre investments,” Yazmin said.
She said investor appetite is strong as data centres are viewed as long-term assets with predictable cash flows that align with institutional investment objectives.
Yazmin said the next step is to improve market familiarity and data transparency to encourage wider investor participation.
She added that as the sector matures and more rated transactions emerge, the bond market will gain greater confidence to finance Malaysia’s digital infrastructure growth.
Meanwhile, Moody’s Investors Service vice president - senior credit officer Nidhi Dhruv said Malaysia is one of Asia Pacific’s fastest-growing data centre markets, with capacity projected to expand at a compound annual growth rate (CAGR) of about 25 per cent through 2030.
She said Malaysia is well placed to capture a large share of this investment because of its cost competitiveness, land availability, stable policies and proximity to Singapore, which faces land and energy limits.
Nidhi said data centres are capital-intensive assets that require heavy upfront investment and a construction period of two to three years and noted that getting the right mix of funding from project finance to capital markets is crucial to sustain growth.
She added that the total data centre capacity in Asia Pacific now exceeds 15.5 gigawatts and is expected to more than double in the next five years, requiring US$900 billion in investments.
"Data centre power consumption will outpace renewable and even nuclear power development in the region. Over the next five years, we expect data centres to continue relying on fossil fuels,” she said. - Bernama
