KUALA LUMPUR (July 31): Pengurusan Aset Air Bhd has raised RM720 million in the world’s largest blue sukuk to fund water infrastructure projects across six states in Peninsular Malaysia.

Proceeds from the Islamic bonds have been earmarked for construction of new water treatment plants, balancing reservoirs, new pipelines, and upgraded pipelines to reduce water losses, as well as other related water infrastructure, the state-owned company also known as PAAB said in a statement on Friday.

“The blue sukuk issuance reflects strong investors’ confidence in PAAB's credit strength, prudent financial management and long-term sustainable financing strategy,” said CEO Zulkiflee Omar.

The sukuk was issued under PAAB’s existing RM2 billion Islamic commercial papers programme. Orders placed by institutional investors exceeded the amount on offer by 1.54 times against the initial issuance size of RM500 million.

The coupon, yield and other details were not disclosed. PAAB is a wholly-owned company of the Minister of Finance (Incorporated) responsible for financing, developing and managing water assets infrastructure in Malaysia.

Projects to be financed include water treatment plants in Melaka, Kelantan, Penang, and Kedah as well as the Sultan Iskandar Water Supply Scheme in Johor. Negeri Sembilan will see upgrades for Kampung Barisan treatment plant, Seremban Barat distribution pipelines, and non-revenue water reduction projects.

The sukuk is issued under PAAB’s Sustainable Islamic Finance Framework developed with Maybank Investment Bank as sole sustainability structuring adviser.

The landmark issue “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 in Asean,“ said Maybank Investment Bank CEO Michael Oh-Lau.