PAAB issues world's largest Blue Sukuk worth RM720 million for water projects

Pengurusan Aset Air Berhad (PAAB) has successfully issued the world's largest Blue Sukuk, a RM720 million Islamic bond designed to finance crucial water infrastructure projects across Malaysia. This issuance marks a significant step in the nation's commitment to sustainable finance and ensuring reliable water supply.

The Sukuk, issued through Pengurusan Air SPV Berhad (PASB) under an existing RM2 billion Islamic Commercial Paper Program, was priced on July 29 and garnered substantial interest from institutional investors. The order book reached RM770 million, representing an oversubscription of 1.54 times the initial RM500 million issuance size, which was subsequently increased to RM720 million.

PAAB's CEO, Ir. Zulkiflee Omar, highlighted that the strong investor response reflects confidence in the company's credit standing, prudent financial management, and long-term sustainable financing strategy. "This Blue Sukuk issuance reflects investors' strong confidence in PAAB's credit strength, prudent financial management, and long-term sustainable financing strategy," he stated. PAAB aims to leverage sustainable capital to bolster Malaysia's leadership in global sustainable Islamic finance.

This issuance is the first under PAAB's Sustainable Islamic Finance Framework (SIFF), which is also Malaysia's first sustainable Islamic finance framework incorporating blue financing features. Developed in conjunction with Maybank Investment Bank Berhad, the framework received a Platinum Sustainable Finance Rating from RAM Sustainability, the highest possible. The proceeds will fund projects like the Jernih Water Treatment Plant in Melaka, the Tok Bali Water Treatment Plant in Kelantan, and Non-Revenue Water (NRW) reduction projects in Negeri Sembilan, among others. These projects aim to enhance access to safe and reliable water supply through new treatment plants, balancing ponds, and improved distribution infrastructure.

Michael Oh-Lau, CEO of Maybank Investment Bank Berhad, noted that the scale of the issuance sets a new benchmark for sustainable water infrastructure financing. The oversubscription further solidifies PAAB's position as a leader in sustainable financing solutions and underscores investor confidence in the company's prospects and governance.