HSBC Group, through HSBC Amanah Malaysia Berhad, has arranged its first ASEAN green sustainable and responsible investment (SRI) sukuk for Leader Energy, an investment holding company 100% owned by HNG Capital Group that is focused on renewable power generation.
HSBC Amanah acted as the sole principal adviser and sole lead manager of the multi-tranche, one to 18-year sukuk wakalah, amounting to 260 million Malaysian ringgit (US$62.09 million), which will fund two solar photovoltaic power projects with a combined capacity of 49MWac in Kuala Muda, Kedah. The two projects are operating under concessions awarded pursuant to Malaysia’s Solar LSS1 and LSS2 energy bidding programmes by the country’s Energy Commission.
The sukuk also marks Leader Energy’s debut project financing issuance in the Malaysian ringgit bond market.
The sukuk, which has been assigned an AA-IS rating by Malaysian Rating Corporation Berhad (MARC), has also been accorded a “Gold” sustainability bond rating, the highest grade in MARC’s Impact Bond Assessment methodology, implying the sukuk is aligned with the International Capital Market Association’s Green Bond Principles, ASEAN Green Bond Standards, and the Securities Commission Malaysia’s SRI Sukuk Framework.
In addition to being the first ASEAN green SRI sukuk in 2020, the sukuk is also the lowest ever weighted average cost of financing among AA3/AA- solar power project financing sukuk issuances and the lowest ever coupon for an AA3/AA- solar power project financing sukuk issuance.
“Despite the challenging market conditions as a result of the Covid-19 pandemic, this transaction attracted robust demand from 12 investors, comprising high-quality insurance companies, asset managers and financial institutions. This shows tremendous appetite for sustainable and green-focused offerings in the market and we at HSBC are proud to have partnered with Leader Energy for this landmark issuance,” Stuart Milne, chief executive officer of HSBC Malaysia, said in a statement.