Malaysia hires banks to manage $2.75 billion sovereign Islamic bond issue: Sources

DUBAI/KUALA LUMPUR - Malaysia has hired three lenders to manage the issuance of a sovereign Islamic bond, or sukuk, of up to $2 billion (S$2.75 billion), according to two sources with knowledge of the deal.

The banks are CIMB Group Holdings Bhd, HSBC Holdings Plc and Standard Chartered Bank Plc, according to the sources, who declined to be named as the matter is private. Debt maturity will be more than five years, the sources said.

Officials with CIMB and HSBC declined to comment. Officials at Standard Chartered and the finance ministry were not immediately available to comment.

Lower global energy prices have hit revenues for Malaysia, Southeast Asia's second-largest oil and natural gas producer, and knocked the ringgit to a six-year low.

Problems stemming from a heavily-indebted investment fund, 1Malaysia Development Bhd (1MDB) and the prospect of the first rise in US interest rates in almost a decade, have also added to the risk of a sovereign downgrade and capital outflows.

Government-owned oil and gas producer Petronas on Wednesday sold a $5 billion four-tranche bond, including a five-year sukuk, IFR, a Thomson Reuters publication reported on Thursday.