Kencana Said to Hire AmInvestment Bank for Islamic Bond Sale

Kencana Petroleum Bhd., the Malaysian oil and gas services company, hired AmInvestment Bank Bhd. to help it sell as much as 250 million ringgit ($78 million) of Islamic bonds which may be marketed to investors next month with maturities of three, five and seven years.

The sukuk will be the first Islamic notes guaranteed by Malaysia’s state bond guarantee agency, Danajamin Nasional Bhd. Danajamin said that it agreed to an “inaugural guarantee” of Kencana’s Shariah-compliant debt.

Sales of sukuk rose to $20.2 billion last year from $14.1 billion in 2008 as investor confidence began to recover from the global credit freeze, according to data compiled by Bloomberg. Sales topped $31 billion in 2007 as oil earnings boosted Arab wealth, and they may near that total this year, KFH Research Ltd. said.

Danajamin’s guarantee will give Kuala Lumpur-based Kencana’s bonds the highest AAA rating, enabling it “to raise funds from the sukuk market at a competitive rate,” Danajamin said.

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