MALAYSIA secured more than US$9.5 billion in investor orders for its US$1.5 billion (RM6.13 billion) global sukuk issuance in July, enabling the government to cut borrowing spreads by 30 basis points for both tranches and achieve record-low pricing.
The issuance, Malaysia’s first return to the international sovereign sukuk market in five years, was oversubscribed 4.7 times, signalling strong demand for the country’s sovereign debt, according to the Fiscal Outlook and Federal Government Revenue Estimates 2027 report.
The government raised US$850 million (RM3.47 billion) through a 5.75-year tranche and US$650 million (RM2.66 billion) through a 10-year tranche.
The shorter-dated sukuk was priced at 15 basis points above the five-year United States Treasury yield, carrying an annual profit rate of 4.612%, while the 10-year tranche was priced at 25 basis points above the corresponding US Treasury yield, with an annual profit rate of 4.949%.
The sukuk received sovereign credit ratings of A3 from Moody’s and A- from S&P Global Ratings.
The report attributed investor confidence to Malaysia’s sound macroeconomic fundamentals and continued commitment to fiscal discipline and structural reforms.
Following the issuance, the government’s outstanding offshore debt stood at RM23 billion, below the statutory ceiling of RM35 billion under the External Loans Act 1963 (Act 403).
The amount accounted for about 1.7% of total Federal Government debt, reflecting the government’s strategy of limiting exposure to currency fluctuations and volatility in international markets.
Most of Malaysia’s offshore debt portfolio is denominated in US dollars, amounting to about US$3.8 billion, with the balance held in other currencies, including the Japanese yen.
The next major offshore debt redemption is scheduled for 2029, with the government managing repayment schedules to reduce refinancing risks and support long-term debt sustainability.
The report said Malaysia’s return to the global sukuk market had been widely anticipated by international investors, allowing the government to tap overseas financing selectively while continuing to prioritise domestic borrowing.
Beyond diversifying funding sources, the issuance established a new benchmark yield curve for Malaysian borrowers, including government-linked companies and corporations seeking financing in offshore markets.
The transaction also reinforced Malaysia’s position in the global Islamic capital market, demonstrating its ability to secure long-term international funding at competitive costs amid global market uncertainty. - October 10, 2026
