KUALA LUMPUR (Oct 13): AmanahRaya Investment Management Sdn Bhd (ARIM), a unit of Amanah Raya Bhd, has temporarily suspended dealings in three funds under its management with immediate effect, citing liquidity constraints due to credit risks related to certain investments.

The affected funds are: AmanahRaya Syariah Trust Fund (ARSTF), AmanahRaya Syariah Income Fund (ARSIF) and AmanahRaya Unit Trust Fund (ARUTF). 

The suspension applies to all subscriptions, redemptions and switching into or out of the funds, ARIM said in a statement. The suspension does not in itself indicate an issuer default or a realised investment loss, the fund manager said in a statement.

The move is being undertaken "in accordance with applicable regulatory requirements to manage liquidity constraints amid increased redemption requests and heightened credit risk relating to certain investments", it said.

"This measure is intended to protect the interests of all unitholders and ensure fair and equitable treatment. It provides time to assess liquidity, review investment valuations and determine appropriate action, while reducing the need to sell assets at substantial discounts that could adversely affect the value of unitholders’ interests," ARIM added.

In the meantime, it is monitoring the affected investments and engaging with the issuer, sukuk trustee and respective fund trustees. It did not disclose any names, noting only that investment valuations will be assessed in accordance with applicable policies, fund documents and regulatory requirements.

The announcement comes after The Edge Malaysia reported over the weekend that fixed-income funds managed by Amanah Raya subsidiaries could be among the most impacted by the fallout from the steep selloff in Zetrix AI Bhd (KL:ZETRIX). The digital services firm saw roughly RM5 billion in market value wiped out over the past month amid heavy selling in shares linked to major shareholder Wong Thean Soon or TS Wong.

According to the report, ARIM's three funds were among the biggest holders of bonds issued by Zetrix AI, which has a RM2 billion Islamic bond programme that it launched in November 2022. Its first issuance of RM1 billion was upsized mid last year to RM2 billion, to fund technology developments related to blockchain and AI-related products, besides refinancing existing debt paper. The notes, issued in tranchees, have a three-year maturity.

In the report, ARIM confirmed its exposure to the notes, though it said the combined holdings of the funds represented less than 30% of Zetrix AI's bonds. That would mean less than RM600 million but easily more than RM500 million.

One tranche of RM215 million was issued in March 2024, with a coupon rate of 5.8%, however, the yield has risen 5.97%, indicating higher selling pressure.

In its Tuesday statement, ARIM said it recognises the impact on unitholders and will review the suspension regularly in consultation with the respective fund trustees.

"Updates, including any extension or resumption of dealings, will be issued through official notices and ARIM’s authorised communication channels. We remain focused on responsible fund management, appropriate oversight and the interests of all unitholders," it added.

As of Tuesday, TS Wong's direct and indirect stake in Zetrix AI was down to about 6.4%. He is still the company's largest shareholder.