PETALING JAYA: Malaysia has witnessed an upswing in sustainable and accountable funding sukuk issuances in the renewable energy sector, contributing to the bond and sukuk market’s complete excellent worth of RM2 trillion as at October 2023.
Securities Commission Malaysia (SC) government chairman Datuk Seri Dr Awang Adek Hussin mentioned greater than 50% of complete SRI sukuk issuances in Malaysia are in the renewable energy area.
“With a complete excellent worth of RM2 trillion as at Oct 31, 2023, it (bond and sukuk market) represents greater than 50% of the Malaysian capital market,” he mentioned in his tackle on the digital Malaysian Rating Corporation Bhd’s Malaysian Bond and Sukuk Conference 2023: Sustainable Transition To A Greener Economy at this time.
For this yr, as much as October, three SRI sukuks with a complete programme measurement of RM2.2 billion have been launched.
“TNB Power Generation’s latest issuance of a RM2 billion SRI sukuk for its renewable energy terminal stands out as the biggest, underlining Malaysia’s dedication to financing initiatives contributing to sustainability and inexperienced energy,” mentioned Awang Adek.
He added that Malaysia is the biggest sukuk market with 35% of worldwide excellent sukuk, forward of Saudi Arabia and Indonesia.
“The nation additionally stays the regional chief in sustainable and accountable funding sukuk,” he mentioned.
Awang Adek mentioned Malaysia accounts for 27% of the US$41 billion (RM191.8 billion) complete issuance of Asean inexperienced, social and sustainability bonds and sukuk.
“Since the launch of the SRI Sukuk Framework in 2014, the cumulative issuances of SRI sukuk have reached about RM27 billion, with over RM18 billion recognised below the SRI Sukuk Framework and Asean inexperienced, social and sustainability bond requirements,” he mentioned.
Awang Adek highlighted that Malaysia leads in SRI sukuk regionally because the nation issued the primary sovereign US greenback sustainability sukuk in 2021 with 6.4 instances bid-to-cover ratio.
“This was regardless of important spikes in rates of interest globally and gradual reopening of the economic system,” he mentioned.
However, Awang Adek mentioned, to succeed in internet zero emissions by 2050, annual clear energy funding worldwide will want round US$4 trillion by 2030. Malaysia alone wants RM1.3 trillion by 2050.
“Considering the massive financing requirement, the monetary sector, notably the capital market, should proceed to facilitate financing and investments in these key areas to assist the federal government’s priorities.
“The Malaysian bond and sukuk market, some of the developed and largest markets in the area, ought to be nicely positioned to supply essential financing in the direction of productive and socially accountable initiatives,” he added.
