KUALA LUMPUR (Feb 22): MBSB Bank Bhd has signed an agreement with Maybank Investment Bank Bhd (Maybank IB) for the establishment of a RM5 billion Sustainability Sukuk Wakalah Programme.

The programme is MBSB Bank’s first sustainability sukuk platform and will be the first of its kind in the world to be issued by an Islamic bank, said MBSB Bank in a statement.

It said the programme will have a perpetual programme tenure and had been accorded a preliminary rating of A+IS by Malaysian Rating Corp Bhd.

Proceeds raised from the programme shall be used to finance or refinance, in part or in whole, future or existing eligible syariah-compliant financing, including for the construction or development of eligible projects to be identified in accordance with the bank’s Sustainability Sukuk Framework issued to govern the issuance of the sustainability sukuk.

The agreement was signed between MBSB Bank’s acting chief executive officer (CEO) Datuk Nor Azam M Taib and Maybank IB CEO Datuk Fad’l Mohamed.

MBSB Bank’s Nor Azam said the Sustainability Sukuk Programme allows the bank to continue to grow its sustainabile generating assets, including lending in green projects, affordable housing, public health, education, small and medium enterprise financing and also the underserved segments.

“The sustainability label attached to our sukuk offers diversification to investors as we acknowledge there is growing demand for sustainability sukuk in the market and this enables the bank to have access to a larger pool of investors, including those with dedicated environmental, social and governance (ESG) mandates,” he said.

Maybank IB's Fad’l also thanked MBSB Bank for giving the group an opportunity to play a lead role in the inaugural Sustainability Sukuk Programme.

“This landmark transaction will create a multiplier effect when MBSB Bank supports its customers who are involved in eligible green and/or social projects. We look forward to bringing more of our sustainability-first ideation, in line with our priority of advancing ESG in the financial and capital markets,” he added.

MBSB Bank further said the Sustainability Sukuk Programme is in compliance with the relevant sustainability frameworks, such as the Securities Commission Malaysia’s Sustainability and Responsibility Investment Sukuk Framework, the ASEAN Capital Markets Forum’s Green, Social and Sustainability Bond Standards, and the International Capital Markets Association’s Green, Social and Sustainability Bond Principles.

"This landmark transaction demonstrates MBSB Bank’s support towards the government’s sustainability agenda and initiatives as Malaysia continues to remain committed to pushing towards a sustainable future and this sustainability sukuk is well poised to benefit from the anticipated green and social bond growth moving forward," the statement read.

Maybank IB is the sole principal adviser, lead arranger, lead manager and sustainability structuring adviser, while Maybank Islamic is the syariah adviser for the Sustainability Sukuk Programme.