Malaysia’s Khazanah Sells $476 Million Ringgit Islamic Bonds

Malaysia’s state-owned investment fund, which is offering to take the national airline private, sold 1.5 billion ringgit ($476 million) of Islamic bonds today, said two people with knowledge of the deal.

Khazanah Nasional Bhd. priced the five-year debt to yield 4.14 percent, within its earlier guidance of 4.1 percent to 4.18 percent, said the people who asked not to be named because the information hasn’t been made public yet. The issuance is part of a 7 billion ringgit program to raise funds for corporate purposes, they said.

Khazanah is in the process of buying up the 30.6 percent stake in Malaysian Airline System Bhd. (MAS) that it doesn’t already own. It plans to delist the airline from the Malaysian bourse once it’s been taken private, according to an Aug. 8 stock exchange filing. A restructuring blueprint will be announced this month.

Raslan Sharif, a spokesperson at Khazanah, declined to comment on the bond sale plan when contacted by phone today.

Khazanah will issue the new debt via its unit Rantau Abang Capital Bhd., the people said. It’s the second time this year that the company has tapped the ringgit sukuk market after selling 15-year securities in March at a coupon of 5.2 percent. Those notes yielded 4.91 percent when last traded on Aug. 6, according to Bursa Malaysia prices.

Malaysia Airlines has come under the spot light this year after losing two of its aircraft in separate disasters, adding to the company’s financial woes. It racked up 4.13 billion ringgit in losses over the previous three years.

Flight MH-17 went down over Ukraine last month, killing all those on board, with an international inquiry underway to identify the cause of the crash. In March, MH-370 mysteriously disappeared and has yet to be located. A new search for the missing aircraft is due to start in September.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Amit Prakash

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