Danajamin Nasional Berhad (Danajamin), the country’s first Financial Guarantee Insurer, yesterday announced that it is guaranteeing a 19-year RM340 million Medium Term Note Programme (MTN Programme) issued by Northern Gateway Infrastructure Sdn Bhd (NGISB).

This transaction marks Danajamin’s inaugural drop off guarantee for a ‘live’ bond which was established by NGISB in 2013.

According to Mohamed Nazri Omar, Chief Executive Officer of Danajamin, “This transaction is something new for Danajamin because typically, we guarantee bonds that are issued from an entirely new bond programme. However, in this instance, NGISB needed us to participate in this guarantee during the construction phase.”

Successfully issued and subscribed today, the funds raised from the MTN programme will be used primarily to part finance the construction cost of the Immigration, Customs, Quarantine and Security complex in Bukit Kayu Hitam, Kedah.

NGISB, a subsidiary of DRB-HICOM Berhad, was awarded a concession by the Government of Malaysia (GOM) through the Ministry of Home Affairs for the development of the Complex back in 2011.

The MTN Programme is rated AA1/stable by RAM Rating Services Berhad premised on the support from Danajamin’s irrevocable and unconditional financial guarantee during the construction period. This means that the guarantee will not be required once the project has been completed.

“In line with Danajamin’s mandate and strategy to develop the capital market and economy, we will be innovative in how we apply our financial guarantee to create rating diversity and eventually bring back market confidence in lower rated investment papers,” added Mohamed Nazri.

Partnering with Danajamin as the Principal Adviser/ Lead Arranger and Lead Manager for this transaction is Hong Leong Investment Bank Berhad.

Danajamin’s foray into this transaction marks the company’s contribution towards bolstering homeland security. Danajamin has provided its guarantee for bond/sukuk programmes issued by 31 viable Malaysian corporations across various sectors. To date Danajamin has brought about a market impact of approximately RM16 billion.

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