KUALA LUMPUR: The Public Sector Home Financing Board (LPPSA) is set to make history by launching its first rated sukuk programme next year, a strategic move aimed at expanding its funding ecosystem while supporting the government’s efforts in prudently managing the country’s liabilities.
Chief executive officer (CEO) Mohd Farid Nawawi said the proposed establishment of a sukuk programme of up to RM25bil is expected to achieve an AAA credit rating, and this rating is based on LPPSA’s strong financial fundamentals, stable salary deduction model, and excellent financial management record since its establishment under the Finance Ministry in 2016.
He said this initiative demonstrates that LPPSA does not rely solely on the “government guarantee” but is proactively seeking alternative mechanisms to balance its funding needs.
“As a statutory body, the government’s aspirations under the Fiscal Responsibility Act to strengthen the country’s fiscal position are our concern.
“Although the ‘government guarantee’ remains relevant to ensure our cost of funds is low to maintain affordable financing rates for civil servants, the establishment of this rated sukuk programme reflects our commitment not to indirectly burden the national guarantee ceiling,” he said when met in an exclusive interview with Bernama recently.
Mohd Farid said LPPSA wanted to show investors that the agency has its own “stand-alone” credit quality.
“Our assets are strong, and our monthly collections are very stable. With the AAA rating, we will be able to attract the investor segment, while helping the government optimise the management of the country’s contingent liabilities,” he said.
