KUALA LUMPUR – Danajamin Nasional Berhad, the country’s Financial Guarantee Insurer, today announced its collaboration with Bank Pembangunan Malaysia Berhad to co-guarantee West Coast Expressway Sdn Bhd’s (WCESB) RM1.0 billion Sukuks of up to twenty one (21) years.
Under the co-guarantee collaboration, Danajamin guarantees the RM350 million tranche while the remaining tranche of RM650 million is guaranteed by Bank Pembangunan. The Sukuks which are rated AAA(fg) and AAA(bg) respectively were successfully issued today and fully subscribed.
WCESB is the concessionaire to the West Coast Expressway Project which involves the development of an interurban highway of approximately 233km connecting the west cost of Peninsular Malaysia from Banting in Selangor to Taiping in Perak to be completed over a period of five (5) years. WCESB is held by Kumpulan Europlus Berhad (80%) and Road Builder (M) Holdings Berhad (RBH) (20%) with the latter wholly owned by IJM Corporation Berhad.
Both shareholders are committed to ensuring the successful completion of the said project, as evidenced by their respective undertaking in the Shareholders Agreement to subscribe for the required capital contribution in accordance with the funding terms of the project financing. In line with general market practice of greenfield project finance, both shareholders also will take up each other’s required capital contribution in order to ensure there are no funding shortfall to complete the said project.
Funds from the Sukuks will be used to part-finance all expenses associated with the West Coast Expressway Project including the development, design and construction of the said highway.
Mohamed Nazri Omar, Chief Executive Officer of Danajamin said, “The West Coast Expressway Project is an example of how long term Sukuk funding can be tailored to provide financing solutions for construction of infrastructure facilities towards achieving the 11th Malaysian Plan. The construction works will contribute to economic growth via multiplier effect whilst upon its completion, it will further stimulate economic growth through improved accessibility in the western corridor of Peninsular Malaysia”.
He added “Building a strong infrastructure system is one of the major requirement in our journey to be a developed nation. People need to have access to essential amenities and services like transport, communications, and electricity. Moreover efficient infrastructure lowers the cost of doing business which will in turn improves competitiveness and productivity”.
RHB Investment Bank Berhad and Bank Pembangunan Malaysia Berhad are the Joint Lead Arrangers for this transaction.
Including this guarantee, Danajamin has provided guarantees to approximately RM7.9 billion bond and Sukuk programmes to-date.
For more information about Danajamin, its services as well as its leadership, log on to www.danajamin.com
Danajamin Nasional Berhad (Danajamin) is Malaysia’s first and only Financial Guarantee Insurer. Established in May 2009, Danajamin’s objective is to ensure that financially viable corporates continue to be able to access the bond market for their long term financing needs and at the same time, be an enabler to further develop the domestic bond and sukuk market.
To date, Danajamin has provided its guarantee for RM7.9 billion bond/sukuk programmes issued by 27 companies across various sectors; and brought about a market impact of RM13.8 billion through its risk sharing collaboration with partner banks.
Danajamin has been accorded the highest rating ‘AAA’ by both RAM Rating Services Berhad (RAM) and Malaysia Rating Corporation Berhad (MARC). It is regulated and supervised by Bank Negara Malaysia under the Financial Services Act 2013. Danajamin is equally owned by Minister of Finance Incorporated and Credit Guarantee Corporation Malaysia Berhad.
Today, Danajamin is well positioned to further enable the development of Malaysia’s capital market. Growing from strength to strength, Danajamin’s total assets and shareholders’ equity stands at RM1.9 billion and RM1.3 billion respectively (as at 31 December 2014).
In a Snapshot
Danajamin’s key objectives are to:
- Provide financial guarantee to enable financially viable companies access to the PDS market to obtain financing, with emphasis on long-term financing
- Further enable the development of the domestic PDS market as an alternative source of financing to complement the banking industry
- Stimulate economic growth by improving access to capital for Malaysian companies
Danajamin aims to:
- Facilitate a wider range of credit-worthy companies to raise capital via the bond/sukuk market
- Encourage smaller/non-traditional issuers to raise capital via the bond/sukuk market
- Provide access to long-term capital for a wider range of companies