KUALA LUMPUR: Pengurusan Aset Air Bhd (PAAB), a wholly owned company of the Minister of Finance (Incorporated) and an agency under the Energy Transition and Water Transformation Ministry (Petra), marked a significant milestone with the successful issuance of RM720mil in Blue Sukuk through Pengurusan Air SPV Bhd (PASB) under its existing RM2bil Islamic Commercial Papers Programme.
The landmark transaction reinforces PAAB’s leadership in sustainable and Islamic finance innovation, while supporting critical investments under Malaysia’s Water Sector Transformation 2040 (WST2040) agenda and long-term water security objectives.
The issuance supports the government’s move to strengthen sustainable Islamic finance through innovation, while expanding Malaysia’s growing presence in the global Blue Finance debt capital market.
Malaysia’s global leadership in sukuk is built on a robust regulatory framework, continued product innovation and strong investors’ confidence, as recently highlighted by Finance Minister II Datuk Seri Amir Hamzah Azizan at the launching event of PAAB’s Sustainable Islamic Finance Framework (SIFF) on June 30.
This Blue Sukuk was successfully priced on July 29. The issuance positions PAAB at the forefront of the sustainable Islamic finance debt capital market for water infrastructure, representing the world’s largest Blue Sukuk issuance under the SIFF. The transaction attracted strong demand from institutional investors, with total orders of RM770mil,representing an oversubscription rate of 1.54 times against the initial issuance size of RM500mil.
PAAB chief executive officer Zulkiflee Omar said, “The Blue Sukuk issuance reflects strong investors’ confidence in PAAB’s credit strength, prudent financial management and long-term sustainable financing strategy, as well as PAAB’s commitment to transparency, accountability and governance of its financial and operational practices to support its sustainability agenda.
“PAAB will continue to mobilise sustainable capital that reinforces Malaysia’s position as a global leader in sustainable Islamic finance, while advancing water security for the future and playing a pivotal role in supporting the nation’s sustainable development agenda.”
This issuance is the first under PAAB’s SIFF, marking two national milestones as Malaysia’s first sustainable Islamic finance framework and the first to incorporate Blue Finance features.
Developed with Maybank Investment Bank Bhd as sole sustainability structuring adviser, the SIFF received a Platinum Sustainable Finance Rating, the highest tier awarded by RAM Sustainability, reflecting the framework’s robust governance, transparency and alignment with internationally recognised sustainable finance principles and global market best practices.
Maybank Investment Bank Bhd chief executive officer Michael Oh-Lau said, “Its scale as the world’s largest Blue Sukuk sets a new benchmark for financing sustainable water infrastructure and showcases the potential of blue finance to mobilise long-term capital for Malaysia’s water infrastructure as well as across Asean.
“The oversubscription by investors underscores PAAB’s leadership in pioneering sustainable financing solutions and confidence in the company’s long-term outlook and sustainability governance.
“We are proud to work with clients on developing innovative financing solutions and broadening the role of Islamic finance in sustainable development.”
Maybank’s support for this transaction aligns with its ROAR30 five-year strategy to mobilise RM300bil in sustainable finance by 2030, while targeting RM100bil in financing the new economy.
The proceeds, which PAAB will receive on Aug 3, will be utilised to finance a portfolio of Blue Eligible Projects identified under the framework, including Jernih Water Treatment Plant in Melaka, Tok Bali Water Treatment Plant in Kelantan, Non-Revenue Water (NRW) reduction projects in Negri Sembilan, Kampung Barisan Water Treatment Plant in Negri Sembilan, Water Distribution Pipelines Seremban Barat in Negri Sembilan, Sungai Muda Water Treatment Plant in Penang, Sungai Karangan Water Treatment Plant in Kedah and Sultan Iskandar Water Supply Scheme in Johor.
The projects include the construction of new water treatment plants, balancing reservoirs, new water pipelines and NRW reduction infrastructure to enhance water supply and improve access to safe and reliable water services.
All projects financed under the framework are assessed through a robust governance process to ensure alignment with internationally recognised sustainable finance principles and deliver measurable environmental benefits.
PAAB is a wholly owned company of the Minister of Finance (Incorporated) established under the Water Services Industry Act 2006. As the national water asset financing entity, PAAB is responsible for financing, developing and ong-term sustainability, resilience and efficiency of Malaysia’s water services industry.
