Fears over pensions fund’s risky sukuk investment

13 June 2012

PAS has demanded an explanation from the government over the move to allow pensions fund, Retirement Fund (Incorporated), or KWAP, to subscribe some RM1.5 billion worth of Malaysian Airlines’ perpetual bonds, or what are known as junior sukuk.

Its Research Centre director Dr Dzulkefly Ahmad questioned how such a risky investment by KWAP could be allowed to take place using pension funds belonging to the public.

“This bond has no rating, no guarantee, no tenure and is high risk. We want an explanation from the government why KWAP is subscribing. Is this forced down their throat?” he said.

MAS’s junior sukuk programme arranged by Maybank Investment Bank Bhd is aimed to raise some RM2.5 billion to fund the airlines’ turnaround, following its biggest losses last year at RM2.52 billion, as part of the company’s plan to raise RM9 billion to finance its operation.

The programme, split to two phases, will see the the first phase of RM1 billion entirely taken up by KWAP.

It is understood that the perpetual bonds received no guarantee from the government, and pay a rate of 6.9 per cent while not rated.

The bonds, Dzulkefly (pic) pointed out, would be treated as equity under Malaysian accounting conventions to raise the capital of the financially troubled MAS. 

“This perpetual bond is rarely issued in the country,” said Dzulkefly, adding that despite the 6.9 percent interest, the sukuk are still considered very high risk investment in the absence of maturity date, as well as the prospect of losses if MAS was faced with another ‘liquidation’.

Dzulkefly stressed that the BN government must come clean on the sukuk investment by making public its terms and conditions.

Please also read: ‘Disclose details on MAS bonds purchase (FMT).

2 thoughts on “Fears over pensions fund’s risky sukuk investment

  1. You cannot use Money raise under SUKUk to finance working capital.You can only use to buy fixed assets.This against Islamic Bank compliance.I dont know how Shariah commitee can give OK.
    I am really worry about KWAP money.Najib have been use itu quite freely.He ask KWAP to give another two billion ringgit to IMDB to buy coal mine in Mongolia and Indonesia.

    By the time you take over Putrajaya,the overment already bankrup.ha ha ha

  2. Where else can these corrupted Umno scumbags and parasites are to get their money without blowing their 55% limit other than that from the bottomless EPF kitty. If you were to add up the forced borrowings from these set ups the government would have gone past the 55% mark a very long time ago. These morons are presently running out of places to borrow money from without showing they have indeed exceeded their limit.

    The present regime must at all any cost save MAS , a company these morons set up , especially with the number of pro Umno goons employees it employs and thus the number of sure votes for the scumbags and parasites. Especially with the GE so near !
    Just compare MAS with Air Asia and you will see the different of the company results of the two companies when politics are involved in appointing the CEO and board of directors of MAS. Unluckily for the Umno morons they even tried to merge the two airlines if not for the objection from the MAS employees union. Unfortunately the bleeding of MAS is still going on but for how much longer before it is wound it when there is no other places to turn to for more funds to recuse MAS from the inevitable bankruptcy. The Umno morons just can’t keep having MAS to issue more junk bonds or to borrow from EPF. Just wait and see who are going to buy these MAS junk bonds !

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