Sime Darby plans US$1.5b Islamic bond

KUALA LUMPUR: Sime Darby Bhd, the world’s biggest listed palm-oil producer, is planning its first multi-currency Islamic bond program of as much as US$1.5 billion in Malaysia to raise funds for capital expenditure.

“We are having ongoing discussions with bankers,” Tong Poh Keow, the group chief financial officer, said in an interview in Kuala Lumpur recently. “The first issuance will likely be in dollars.”

The conglomerate, which also has interests in industries ranging from property to heavy machinery in more than 20 countries, has total debt of RM3.3 billion (US$1.1 billion), according to data compiled by Bloomberg.

The company plans to increase capital expenditure by 23 per cent to RM7.75 billion in the current fiscal year ending June 30, 2013, chief executive officer Mohd Bakke Salleh told reporters in the capital yesterday, after releasing earnings results.

Sime joins Malaysia’s Axiata Group Bhd in seeking to tap funds in the US$1.3 trillion global Islamic finance industry. The Kuala Lumpur-based telecommunications company announced, last month, that it received regulatory approval to start a similar-sized multi-currency sukuk program.

Sales of corporate Islamic bonds in Malaysia, the biggest market for the debt that pays returns on assets instead of interest, are approaching a record in 2012. Issuance rose 41 per cent to RM43.2 billion from a year earlier, compared with the all-time high of RM75.6 billion last year, according to data compiled by Bloomberg.

The Bloomberg Malaysian Sukuk Ex-MYR Index, which tracks non-ringgit denominated sukuk listed in the Southeast Asian nation, gained 4.8 per cent this year to 109.396, after climbing 5.9 per cent in 2011. -- Bloomberg

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