(Corrects headline, paragraphs 1 and 5 to state that proceeds will be used to repay Malaysian sovereign sukuk, not debt issued by 1MDB; adds in paragraph 2 that 1MDB debt is part of mounting Malaysia debt)
By Archana Narayanan
DUBAI, April 2 (Reuters) - Malaysia’s government will begin meeting investors on Monday to discuss a potential dollar-denominated sovereign sukuk, as it looks to repay some of its previous debt.
Malaysia is faced with mounting debt, including over $11 billion from its state fund 1MDB, which is weighing on Malaysia’s sovereign credit rating and has also been a factor contributing to ringgit weakness in recent months.
The government has appointed CIMB, HSBC and Standard Chartered to arrange meetings in Kuala Lumpur on Monday, Singapore on Tuesday, Hong Kong on Wednesday, Abu Dhabi and Dubai on Thursday, London on Friday and New York the following Monday, a document from lead arrangers showed.
No details on the size and tenor of the issue were provided, but sources with knowledge of the deal previously told Reuters that it would be up to $2 billion with a maturity of more than five years.
The Malaysian government would use the proceeds for sharia-compliant purposes including the redemption of $1.25 billion of maturing Malaysian sovereign sukuk this year, the document showed.
Prime Minister Najib Razak this month ordered the auditor general to examine 1MDB’s accounts, after allegations of corruption and mismanagement.
The fund, which owns real estate and power assets, will eventually be dismantled and most of its assets will be disposed of, sources have told Reuters.
A draft prospectus seen by Reuters showed the bond issue would use the wakala format, in which certificates are issued by an originator to purchase assets that are given to an agent for management. (Writing by Praveen Menon; Editing by Andrew Torchia/Ruth Pitchford)